he Build to Rent sector is the only part of the UK’s new build housing market which is on the up. Property specialist Savills predicts that this sector will grow by 1.1 million households between now and 2021.
This is exciting news for those companies and institutions looking to invest in this new property class. And it’s an exciting development for product suppliers too, because in Build to Rent the cost of a building element over its entire lifecycle becomes a vitally important consideration for developers.
According to the British Property Federation, which has created a live map to plot the spread of Build to Rent, at the time of writing there were 57,085 (updated 13/06/15) Build to Rent units completed, under construction or with planning permission in the UK. And this isn’t just a London phenomenon: around half of those schemes are outside the capital with Savills pinpointing Manchester, Reading, Edinburgh and Bristol as good locations for would-be investors.
Given the nature of Build to Rent, it’s perhaps not surprising that housing associations are playing a significant role in this growing sector. Fizzy Living, a wholly owned subsidiary of Thames Valley Housing, with backing from the Abu Dhabi Investment Authority, already has five developments under its belt. Developer Stanhope has joined forces with Network Housing Group, announcing two schemes recently.
Another big player is Newcastle-based Grainger, the UK’s biggest listed residential landlord, which has pledged to invest £850m in Build to Rent between now and 2020. And Legal & General generated lots of headlines recently with news of a house factory in West Yorkshire and a £600m Build to Rent fund, created with Dutch pension fund PGGM.
There are lots of characteristics which make a Build to Rent development different from a build to sell one. Brands such as London-based Essential Living and Willmott Dixon’s be:here make a big play of the importance of community and concierges; be:here provides equally sized bedrooms, all en suite, to cater for younger sharers.
But a linking theme, whatever demographic is being targeted is build quality with longevity. When it comes to selection of the building’s elements and systems, designers and specifiers must consider whole life costs – as well as initial capital outlay. The cost and frequency of maintenance is a vital consideration since it impacts directly on the return on investment.
Energy efficiency is of major importance too. Not just because the environment is of particular interest to younger householders: would-be renters will be looking at running costs when making a decision on where to live. Elements, such as windows, must require little, if any, maintenance and they must offer high levels of energy efficiency.
So the Build to Rent sector is booming – despite fears from some that the Chancellor’s unexpected decision in March budget raise stamp duty for on the sale of rented dwellings would slow things down. The news on deals and developments just keeps coming. Exciting times indeed.