You may not have heard about Build To Rent (BTR), but this kind of development is now causing a stir in the housing market. Build To Rent developments are new build properties that have been designed for the specific purpose of renting.

They offer a host of perks, including dedicated on-site managers, purpose-built communal areas and include green spaces and long term tenancies. They also, of course, come with a high price tag. If you’re not in the market for buying a house, they can act as a fantastic short-term alternative.

The private rented sector faces numerous issues, not least an increasing number of people who want or need to rent properties.

So, what should you know about build to rent homes? Here, we offer you our expert advice about the latest build to rent opportunities across the country and give you the information you require about how these newly built rental properties could help resolve the difficulties today’s rental sector is facing.

In this article, you’ll find:

  1. What is build to rent?
  2. How many build to rent homes in the UK?
  3. What benefits do BTR developments offer?
  4. Build to rent vs. private rented sector (PRS)
  5. Are there any disadvantages to this scheme?
  6. Why is it so expensive?

What is build to rent?

Build to rent properties are new-build blocks of apartments that are constructed specifically for the rental sector. These type of homes are specifically aimed at the rental market and not for those who want longer-term home ownership (mortgages). To qualify as build to rent developments, they must have a minimum of 50 residential units within the block under the same management and owned by a single landlord.

These developments have been designed to address tenants’ issues in private rented housing these days, many of whom live in poor quality rental homes with high rent, an unscrupulous landlord and excessive fees.

At present, build to rent schemes are in short supply.

How many build to rent homes in the UK?

Only around 50,800 are available in various city locations around the UK with 36,700 homes under construction. However, the private rental market is changing and going through a period of growth, and more developers and investors are looking into the possibility of build to rent property development.

Almost 120,000 build to rent schemes are currently being planned or are under construction, and within two years, there are set to be a further 200,000 rent build sites introduced to the housing market.

There are around 5 million social and private rental homes in the United Kingdom, and of those, build to rent homes are in a small minority. Nevertheless, the number of these developments is growing, according to the British Property Federation. In the future, they are set to be a prominent feature of the renting market in the UK.

What benefits do BTR developments offer?

  • One out of every ten renters in the private rental housing market has short term leases. Rent build housing is changing this. Homes in this scheme offer the benefit of long tenancies of 3 years or more.
  • One out of every six renters has had their rents unfairly increased. With rent to build, rent amounts are laid out clearly, including any basis on which an increase has been made.
  • Over a third of all tenants find it hard to demand their landlords perform essential repairs. A rent to build development is owned and maintained not by multiple landlords but by a single individual or professional company providing management onsite. This makes it more likely for residents to get a swift response to their essential repair enquiries, which is a major benefit. Furthermore, landlords have to put complaints procedures in place, and they must have membership of a recognised professional ombudsman scheme. So, should things go wrong, residents who reside there can easily complain and demand to have their problems addressed quickly.
  • More than a third of tenants have high charges upfront for references or inventories. There are no upfront fees to pay for homes in the build to rent sector. Only advance rents and deposits are essential.

Build to rent vs. private rented sector (PRS)

People who rent homes in the private rental market may have significant disadvantages compared to those living in a build-to-rent house. This scheme offers rent advice, and no upfront fees are required. Both can have a positive impact on the rental experience overall.

Many renters would prefer living in a property that they could rent direct from a reliable housing provider or company instead of a lettings agent or private landlord.

Furthermore, living in new build housing developments that meet the latest essential energy efficiency and safety standards is appealing to renters rather than renting a cold, damp, and potentially hazardous house. Something that is, unfortunately, all-too-common in the private rental housing market.

Are there any disadvantages to this scheme?

Are there any drawbacks to build to rent? The answer is yes. There are too few developers at present investing in the scheme. Most of the development sites in the planning and construction stage are based across London, with very few available for those living outside the capital. London has a large proportion of the approximately 21,000 newly built properties for rent, with around 12,000 being local to the capital.

Not only that, but not all renters qualify to rent and live in a home in the existing developments. Most are aimed specifically at certain demographics, including over 55s, young professionals, and renters with pets.

It is likely that developers will likely broaden their horizons at some future date, planning more community units suitable for a wider variety of individuals who prefer renting rather than the option to buy a home.

Finally, renting a newly built Build To Rent property is certainly not cheap. Even in London, where local rent amounts are famously high, living in a build to rent apartment can come at a cost.

Why is it so expensive?

Build to Rent offers a host of advantages, but that means a large increase in the rents charged for each let. The developers, operators and management teams of these units include numerous essential community services and facilities in the price.

That all adds up to rental costs being much higher than the local average, especially in London, where prices are over 8% higher than those charged for other similar homes.

Nevertheless, the key thing to remember here is that build to rent offers excellent value for money. Residents benefit from communal lounges and workspaces where they can meet other members of the local community.

Besides indoor lounges and event spaces, they also often offer green outdoor spaces, gyms, laundries and concierge services.

With all of these essential amenities within easy reach, together with the advantages of a well-managed block and longer tenancies, it isn’t surprising that this high-spec lifestyle comes at a cost.

This could be a problem if you’re planning to purchase a home of your own at some future date. If living in rented accommodation forever isn’t for you, it’s essential to save up a deposit and, with high premiums on rent, it’ll take you much longer to get together enough funds to get yourself set up on the property ladder and living in your own home.

It may, therefore, be worth doing some research into other types of government housing sale scheme, for example, Rent to Buy, which involves renting a home for several years before it’s offered to you for sale, or shared ownership, which involves the sale of a share (between 25% and 75%) of a newly constructed house, bungalow or flat, with the option to purchase the remainder at a later time.

You now have all the information you need about build to rent so that you can make a well-informed decision about whether it could be the right option for you.

Mick Silver

Mick Silver

Mick Silver is the CEO and co-founder of Moovshack. With over 20 years in the property industry. After working with traditional estate agents, Mick decided to launch Moovshack; a fully interactive property app.