The rise of the build to rent scheme 30 May 2021
What is a Build to Rent Scheme?
The Rise of Build to Rent Schemes (BTR)
Build-to-rent (BTR) is a rapidly growing sector of the UK housing market, a distinct asset class in the PRS, as defined in the National Planning Policy Framework:
“Purpose-built housing that is typically 100 per cent rented out. It can form part of a wider multi-tenure development comprising either flats or houses, but should be on the same site and/or contiguous with the main development. Schemes will usually offer longer tenancy agreements of three years or more, and will typically be professionally managed stock in single ownership and management control.”
Typically a BTR development will provide tenants with a brand-new, fully-equipped furnished home with features such as:
- Concierge service
- 24/7 gym studio
- Landscaped gardens
- Events programme
- Responsive management service
- Great security
- Balcony or roof-top views
- Pet-friendly environment
- Excellent cleanliness in communal areas
- And an overall “high end feel”
Why choose BTR?
Build to rent homes are now springing up in many cities and becoming increasingly popular as the development of choice for investors looking for developments which will offer secure and valuable assets for the long-term.
At the moment the UK is experiencing growing demand for rental housing, in fact, it is predicted that 1 in 4 households will be privately renting by the end of this year (2021) and the UK population is already over 68 million, continuing to grow at a steady rate of around 0.5% pa, so the market is set for the long-haul.
UK Rental Market Boom
‘Generation Rent’ is now cemented into the UK, with around 4 out of 10 millennials in the private rental sector up to the age of 30 and much of the wider population renting into retirement, which directly appeals to investors wanting to build a long-term portfolio in the UK.
The high demand for quality rental accommodation with good amenities, coupled with the end of the recent covid pandemic lockdown bringing an unprecedented increase in property prices, (8% increase YOY seen in Greater London at the end of Feb 2021) means that large scale investment in the UK is attracting a surge of foreign direct investment (FDI) and securing our place on the map.
Why invest in UK property?
In the 2020 Global Real Estate Transparency Index by JLL, it emerged that the UK was the ‘world’s leading investment destination, pushing the boundaries of transparency through technology, sustainability, regulation and tracking of alternative sectors’.
The 2020 Global Real Estate Transparency Index covers 99 countries and territories and 163 cities. The latest Index is based on 210 indicators, having been extended to include additional data on sustainability and resilience, health and wellness, proptech and alternatives. These variables are divided into 6 areas:
- performance measurement
- market fundamentals
- governance of listed vehicles
- regulatory & legal frameworks
- transaction process, and
- environmental sustainability
The Demands of BTR
Build to rent developments do require a carefully thought-out approach and that is one of the areas where Perry Holt & Co can assist.
As a BTR investor you will not only become the owner of the development but also the operator of the building. The quality and on-going upkeep of the end-product must be maintained to a very high standard. Your investors will want assurance that they are buying into a complete package: The building, the maintenance & the occupiers/ tenants must all be superior. Perry Holt, combined with our sister company, Sewell & Gardner, ‘The Sunday Times’ award winning best UK estate agency for 3 consecutive years, can handle the complete development from its conception, right through its lifespan.
It is essential that the build-quality is such that these homes are where people will want to live for many years. With our many years of experience working with major developers, we know how to source quality materials which look fabulous and last well, which are eco-friendly and sustainable.
It is not just about the interior of the apartment, it is about the community being built, the neighbourhood, the facilities and the culture. At Perry Holt we will assist with the creation of effective co-living amenities and make sure that communal spaces align with our client’s vision and current market trends. As mentioned above, anything is possible from on-site events, roof terraces, pools and gyms to bars and hot-desk working areas.
Once ready, we can source top-quality tenants and manage the on-going property management and maintenance for the long-term to ensure your capital investment remains strong.
Affordable Housing and BTR
The National Planning Policy Framework recommends a 20% benchmark for the level of affordable housing required to be provided in BTR schemes, a figure significantly below the levels typically sought by local planning authorities. The key points are;
- Housing must be offered at a discount (inclusive of service charge) of not less than 20 percent against market rents (the discount, along with the proportion of affordable units within the scheme can be varied across the development and over time)
- BTR affordable housing is under common management with the market units (ie no housing association is required)
- It is possible to negotiate a trade-off between the level of affordable provision and the extent of the discount on a specific scheme
- Tenancies should be of not less than three year duration (although with shorter terms offered to tenants at their choice), and
- Councils should not have nomination rights and while eligibility criteria should be agreed between the developer and the local planning authority, “Final decisions over the occupancy criteria for affordable private rent homes should be made by the build to rent scheme operator, working with the authority.”
Build to Rent in Watford
Watford has its own build to rent scheme currently being constructed on Ascot Road. The project is a joint venture between Harrison Street & Cortland and will deliver 367 BTR units comprising of one, two and three bedroom accommodation.
The scheme will be constructed across five building ranging from 4 to 24 storeys and will also provide 119 affordable units which has been forward sold to an housing association.
As part of the ‘community’ feel with BTR schemes, Cortland Cassiobury as the development is known, will provide fitness centre, media room, business centre, residents lounge, outdoor space with grilling stations and fireplaces, dog park, reception and concierge. In addition there wil be over 5,000 sq ft of retail space, 314 parking spaces and 50 storage units.
The scheme is expected to be completed by March 2023.
Enquire about Build to Rent Schemes
Contact our land & development manager:
Ben HowardLand & Development Manager
Ben Howard Land & Development Manager
My background is in the residential sector of the property industry which enables us as a firm to offer a niche consultancy service with vast experience in commercial and residential in-house. I previously worked for our sister company Sewell & Gardner and during my time there I worked in the residential sales, new homes and land departments which gives me a great knowledge when appraising sites to quickly ascertain a GDV. The previous role I am most proud of is working on behalf of Inland Homes to oversee phase 1 of their 100 unit scheme in North Watford. This gave me invaluable experience of both how a developer works and the construction process!
My role at Perry Holt & Co is to source and structure development acquisitions on behalf of my clients. This can vary from parcelling together 3 back gardens for 4 dwellings or working with our Head of Commercial Joel Lobatto, looking at a piece commercial land which has developments potential for a high rise block of apartments. I always pride myself on being at the end of the phone if needed and I don’t shy away from difficult situations. I like to treat my clients how I would want to be treated.
Away from work I enjoy running, socialising and continuing my long term support of the local pubs! I also enjoy watching my team Chelsea FC play but end up going to more Watford FC games (more a fan than a supporter I suppose).