The build-to-rent sector has been snapped back into focus following a meeting between the Deputy Mayor for Housing and Residential Development and leading developers and investors in build-to-rent housing.
Deputy Mayor for Housing and Residential Development, James Murray, said, “We need to build more homes of all sorts in London, and the build-to-rent model offers an important opportunity to attract investment into new housing in the capital.
“Build-to-rent can provide high-quality, well-managed rented homes, including affordable housing, and can potentially deliver new homes faster than conventional developments for sale. I met representatives of the sector to discuss ways we can work together – we want to support the sector and offer certainty to investors, which is particularly important following the EU referendum result.“
The Mayor of London, Sadiq Khan, has been has pretty vocal in his support for the build-to-rent sector, identifying it as a key player in increasing housing supply. According to Murray, Khan is keen to offer the sector more certainty to help it build scale.
The Deputy Mayor is discussing how City Hall can support the sector through a supportive approach on planning, and through their land and investment programmes.
Build-to-rent attracts new investment into housing delivery, can deliver homes faster than traditional market sale developments and is less prone to house price cycles. The sector has gone from a virtual standing start to nearly 20,000 homes built or in development over recent years.
With a growing population but increasingly unaffordable home ownership in London, there is a demand for tens of thousands of good quality private rented homes every year. The build-to-rent sector currently represents one in five housing starts in the capital.
Demand, however, is not confined to the capital or those looking for starter homes. “We have seen continual demand from people wanting to retire to the coast,” said Peter Girling, Chairman of Girlings Retirement Rentals. House prices in popular resorts can be prohibitive and renting may prove a better financial option, which is why we are seeing more people downsizing, selling the family home and choosing to rent in a purpose built retirement complex.”
The benefits are threefold – releasing equity in a home to invest for the future, affordable rents on assured tenancies that include property maintenance, access to services and a ready-made community, and a slower and healthier pace of life.
“People are also free from the worry of unexpected bills and the upkeep of a home, so they have more time to make the most of their golden years,” said Girling. “The most popular seaside towns for our residents are the southern resorts of Bournemouth, Hastings and Clacton-on-Sea.”
A growing number of single women are also opting to rent in retirement because of the companionship, financial benefits and security it can offer. Approximately 70% of Girlings’ residents are single women, 20% are couples and 10% are single men. “They rent because of the companionship of living in a retirement development and the flexibility and security that renting provides,” said Girling. “Women like the fact there is a ready-made community of people of a similar age, with lots of social activities going on – from fish and chip suppers to bingo nights. Renting also frees them up from the worries of house and garden maintenance as this is all included in the monthly rent.”
According to the British Property Foundation, there are over 55,000 build-to-rent units now in the development pipeline across the UK. The Department for Communities and Local Government has allocated £1 billion for build-to-rent development, as well as appointing a taskforce and champion to drive the cause.
The UK’s decision to quit the EU is only likely to win the sector more cheerleaders, as professional landlords may seem a safer bet than private ones amid economic uncertainty.
“In the year 2000, 60% of Londoners owned their own home, but according to PwC’s research, 60% of the capital’s population will be renting by 2025,” said Michael Allen, PRS Director at Tipi. “We feel that it’s time those renters got a better deal.”