Unless you’re directly involved in the property industry, you might not have heard of Build to Rent (BTR) before.
It’s a relatively new concept that is rapidly gaining more attention in the media, especially as new schemes appear around the UK, leading to many people asking the question: what is Build to Rent?
In this article, we’re exploring what Build to Rent is, the benefits of Build to Rent and how BTR is impacting the wider property market as a whole.
What is Build-to-Rent?
Build-to-rent, often abbreviated as BTR, is a property development model that involves constructing purpose-built residential buildings specifically for rental purposes.
At the time of writing, there are 88,100 complete BTR homes in the UK, with thousands more under construction or in the planning stages. In Birmingham, there are currently 2,614 BTR homes, with hundreds more under development or in the planning stages.
Unlike traditional property developments, where individual units are sold to multiple buyers, BTR developments are owned and operated by a single entity, often an institutional investor.
The primary goal of BTR is to provide high-quality, professionally managed rental housing that meets the needs and preferences of tenants. BTR developments often include amenities, such as onsite gymnasiums and communal spaces that enhance the tenant experience.
The aim is to create a community, not just a block of flats; this vision (along with the fact the buildings are owned by a single entity) sets BTR developments apart from regular apartment block developments. This vision means that BTR homes tend to attract young professionals as tenants.
How does Build-to-Rent work?
The concept of BTR came about as a way of addressing common issues that tenants faced with private renting, although it also offers several other key benefits:
– Build to Rent developments specifically feature communal facilities for residents.
– Build to Rent developments look to offer high-quality accommodation in larger cities, typically near amenities and transport links.
– Build to Rent developments generally have on-site staff such as a concierge.
The following steps usually make up the wider BTR development process:
1. Research Phase
BTR projects typically begin with the acquisition of a suitable plot of land. Choosing the best location is crucial to get the best return on investment. This is why many investors choose to work with estate agents who have an acute understanding of the local area. At FleetMilne we have two decades of experience working within Birmingham city centre and are able to offer detailed and strategic advice for those interested in BTR projects based on our extensive insight into the evolving property landscape.
Interested? Speak to one of our consultants.
2. Development Phase
After the land has been purchased, developers design and build the residential complex, often with a focus on maximising space, energy efficiency, and tenant amenities, with the intention of renting out all the units.
3. Ownership and Management
Once the development is complete, the single entity retains ownership, appointing a professional property management company to take over the day-to-day operations of the BTR development. The company will screen prospective tenants, handle leasing, and manage tenant relations. Property managers oversee maintenance and repairs, ensuring that the property remains in good condition
Discover more about our property management services.
What are the Benefits of Build to Rent?
Since they own the entire development, it’s a key goal for many Build to Rent developers to create the highest standard experience possible. They don’t just want to deliver quality accommodation, they want to create a community including facilities such as co-working spaces, gyms and games rooms as well as high-end features such as concierge services.
But what other benefits come with a Build to Rent development? And how do they impact common problems with renting?
1. Better communication
A major benefit of choosing a Build to Rent development is that you only have a single point of contact managing the entire scheme. Since these developments are also generally quite large, they’re typically professionally managed which almost guarantees quality communication and quicker response times to issues.
For tenants, this also typically results in a fairer complaints process, as the landlord has to have proper measures in place and be part of a professional body.
2. Longer tenancies
Build to Rent developers generally offer longer tenancy agreements than you’d find in traditional buy-to-let, meaning tenants have long-term security.
BTR tenancies are typically three years or more, as opposed to traditional short-term tenancy agreements of six or twelve months.
This is where BTR has an advantage over standard buy-to-let – tenants may not want a longer tenancy but at least they have the option.
3. Clear tenancy terms
A major issue that many tenants face in the traditional buy-to-let sector is unexpected changes to rent or tenancy terms. With BTR tenancies the rent is clearly laid out, as well as the potential for increases and reasons why this would occur.
4. Development facilities
While traditional PRS developers are starting to include on-site facilities in their schemes, there’s no guarantee that a landlord will have these features in a property. BTR schemes, on the other hand, typically base their entire appeal on providing such a high standard of living.
They’re always looking to create a sense of place for residents, ensure a strong community and attract ambitious, young professionals.
How is BTR changing the UK property market?
Build-to-rent is a novel approach to housing in the UK that has the potential to reshape the rental market. With its focus on high-quality, professionally managed properties and tenant-centric amenities, BTR provides a viable alternative to traditional renting and home ownership.
As the demand for rental housing continues to rise, BTR may become an increasingly prevalent and essential part of the UK’s housing landscape.
