Build to Rent (BTR) is a lifestyle phrase for purpose-built long-term rental property given by professional landlords in the United Kingdom, BTR is the UK equivalent of their multi-family sector
With nearly 1.74 million homeowners expected to reside in BTR by 2030, the spotlight is on 20 key cities where the UK Government has upped its housing targets by 35%.
UK Build to Rent (BTR)
Low inflation and stagnant salaries, set against house price inflation have together priced young people out of homeownership and fuelled demand for the Build to Rent sector, as well as those leaving professionally run purpose build student housing expecting more. Enter BTR. BTR delivers purpose-built housing designed for rent set in a serviced environment with tech enabled front-of-house staff for immediate service delivery.
Rental households have grown by 74% in the last decade, and despite the fact that 20% of private landlords are selling up, demand for rental housing is predicted to increase from 4.5 million to 7.2 million by 2025. As a result, the fastest-growing segment of the housing industry is Build to Rent (BTR).
The BTR argument
Build to Rent, is a rapidly expanding segment of the UK housing market, and is increasingly contributing to overall housing supply. The British Property Federation (BPF), in collaboration with Savills, report the sector is growing by 14%+ a year.
The UK Government's has signalled to the industry the critical role that they want high-quality rental housing to bring by upping its housing target by 35% in 20 key cities including London, Birmingham, Liverpool, Bristol, and Manchester.
The rise of second cities:
Affordability has driven many graduates to stay in University cities, these are places where good quality supply is scarce. Post the 2020 pandemic, work life balance has shifted towards home, eight days a month commuter rail passes and high-speed trains mean London is losing its allure. Together these are ideal catalysts for increasing demand for (a) flats in cities and (b) single-family homes in 'garden suburb commuter zones' just outside.
Top UK BTR hotspots - city spotlight
Birmingham is known as a young city, typically filled with young people as age range to 35 or below. It is a great draw for young people as it is where the party life is located, or even where a lot of popular universities are located and most young people want to move out to Birmingham as it is one of the most attractive places for young people. Following on, this gives multiple new purposes to build flats for example a university student wants to move to Birmingham to be closer to their studies but on a low budget and maybe renting a flat.
For young people, Birmingham has a lot to offer. It is a metropolitan city, with world-class transport links and infrastructure, as well as cultural and social highlights. It is a top choice for huge number of young people looking for an alternative to London, which is more affordable and can offer a better quality of life.
The demographic of Birmingham is an ethically and culturally diverse city. The city is the core of the second most populous urban area in the UK taking after London at the top.
London is known to be the city of opportunities much different from other cities it is very diverse even for age. It is a great draw for young people and even older people as it is all about business life and party life as it is so central and diverse. Most well-known business companies are located in London which attracts business people to moving into London for their jobs. Additionally, London is also known for its universities and across the city are multiple universities which attracts younger people to move into London for great opportunity for the future.
Most people move out of their hometowns to come to London for multiple reason which makes it such a great opportunity and many purposes to build in for flats as people who move there to start up and for example want to buy a flat, building flats in London attracts so many people as it is surrounded by everything such as transport and shops.
The demographic of London has the population of 8,173,941. Of its number of 44.9% are white British. 37% of the population are born outside the UK, including 24.5% born outside of Europe.
Liverpool is known for its rich art and culture to a vibrant and exciting club and bar scene, the city benefits from a culturally diverse populations, having its own china town and Britain’s oldest black African community and the annual influx of students from all over the world add to the cosmopolitan atmosphere.
Liverpool is a great drawn for a wide range of lifestyles and attracts many types of people ranging from people who are into sports as Liverpool holds 2 local football teams Liverpool and Everton and the annual horse racing event. It also attracts students for their universities with roughly around 70,000 students in Liverpool attracted by great sceneries and the night life of clubs and bars this gives multiple purposes to build flats.
Bristol is known for its amazing events that they hold including its festival and amazing street art scattered all over the city, also with its water and green spaces along with its bridge. Bristol holds lovely scenery around the city. The demographic of Bristol has a total of 70,630 in the year 2022 and the age range for people living in Bristol are 32 and above.
Bristol is an attractive place to build as it as a high employment rate, fast growing economy and location and travel connections. The city ranks highly for its quality of life with strong jobs market driving up the demand for rental properties with gives reasons to build in this city.
Manchester is known for its affordability of living, compared to other larger cities in the UK such as London, Manchester is one of the top cities for students this makes Manchester a university town attractive for the younger people as the rent prices are 50% cheaper than for in London making it very attractive as it is just as similar as London but cheaper living. Great location for younger people as Manchester holds famous events within the year including park life, food and drink festivals etc.. having many attractions gives many reasons to build flats as the population in Manchester grows meaning more flats need to be build and with such low rent makes it most attractive.
The demographic of Manchester is a widely diverse mix of ethnic groups. The estimated age population living in Manchester is 296,000 people, 18-49 years of age making Manchester a young city.
Leeds is known to be more settled than in comparison to other cities like London and Manchester, Leeds has a much larger greenery space as it is further away from the urban areas, Leeds is well known for its university accommodations and student life. In compared to London Leeds has more typically older aged people as it’s a much more peaceful quitter place for people settling down and not for the party life however, it has night life for younger people making it very diverse giving it reasons for new builds in flats for students and older people.
The demographic of Leeds show the highest of aged people living in the city is aged 16_^$ being at the population of 520,582.
The city Leicester is known for its hotspot for commuters, buyers are also drawn in by attractive property prices, great schools, high employment and some superb higher education institutes. Leicester attracts a diversity of aged people and their income.
Leicester has a great attraction for the business people as it is ranked one of the best places to start a business in the UK-2nd to London 35% growth in business stock over the last five years – greater than London, Birmingham and Nottingham. Businesses in Leicester save on an average £15,500 per annum,per employee compared to London. This makes Leicester a majorly attractive place for working people and people who own a business with the benefits, this gives reason for new build in flats.
The demographic age is typically 38% of the city are aged between 0-24 with a significantly higher proportion aged between 20-24 years in comparison to the England average.
NEWCASTLE UPON TYNE BTR
Newcastle is a unique city because of its River Tyne, as well the sea, that in ways makes Newcastle an interesting property investment. Newcastle is a major student city making it good for student property investors. The university of Newcastle upon Tyne has around 23,000 students from around 120 countries with its main campus to the northeast of the city. Northumbria has around 27,000.
The northeast has some of the lowest property prices in the country. Newcastle is the cheapest major city for the property in England. In Newcastle the demographic are around 1.2million residents with an average age of 41.3 years.
Southampton is a port city, and is closest city to the new forest national park. It is rich in cutler and activities, with transport links and connections to the rest of the country. Southampton has around 326 acres of fields, wetlands and wildlife making it one of the greenest cities in the UK. With its universities, art avenues and port Southampton has become a developing culture hub with great connections by land and sea. It is a city that has been favoured by students, young professionals, retirees and sailing lovers.
The largest age group in the city of Southampton is between 15 and 64 in total 55.1% of the population. The second largest bracket are those that are 65 and older 34.1%. Southampton makes it a great draw for much older people who are settling down and have kids or have retired making it a lot of new purposes built flats, it’s also a university down.
Nottingham is known to be a culturally rich city centre to picturesque villages in the country side. The demographic for Nottingham is ranked as one of the best places to live in the UK and the residents have the most disposable income- which means they have more to spend and live a wealthy lifestyle compared to other cities who may be on a tight budget. Nottingham is a great attraction for highly skilled workforce and attracts many businesses. Living in Nottingham is a popular choice for buyers hoping it helps to avoid the inflated prices found in other cities. This city is known for its money, wealthy people.
The typical age range based in Nottingham is 69% 16-65 years old.
BRIGHTON AND HOVE BTR
Brighton is known to have all the big city amenities, yet its relaxed. Its close enough to London for people who enjoy going to London, which is good of the demand for property investors, and the rent they can earn. Brighton is well known as a seaside resort. That means it has a huge tourist and visitor trade, which supports the demand for accommodation which lots of new purpose built flats for example people spending holidays in Brighton need a place for accommodation and may want to rent a flat out.
Brighton is a tourist attraction city who love beaches and shopping. Brighton also has a few universities so you will find students all over. The demographic in Brighton is diverted in age but mainly filled will older people.
With nearly 1.74 million homeowners expected to reside in purpose built BTR homes by 2030, the UK must address the housing issue by constructing a variety of houses and tenures to fulfil everyone's demands.
In recent years UK legislation to raise standards in rental housing has been aplenty. As well, barriers to renting such as up front tenant fees have been banned and deposit alternative products introduced. The institutional landlord is focussed on 'customers' not 'tenants' and ensuring that renting is a pleasant experience, a lifestyle choice and is seriously focussed on creating some of the UK's newest and most dynamic neighbourhoods.
Rising capital value dictate that the design/use of space is becoming increasingly significant. Depending on location and unit mix, affordability can start at 20% of income attracting people out of the poor quality Houses in Multiple Occupation 'HMO' market.
Age targeted living:
BTR is age targeted. Many see it as the obvious progression from professionally run student housing and bedroom clusters around a shared kitchen. BTR is a step up from coliving's lack of personal square footage and home comforts. BTR offers renters spaces where most bedrooms are double and the square footage per person is more fairly apportioned. Simple, durable, bright and clean well designed spaces within places that are community driven.
UK BTR is more than just city centre. The surge in keenly priced, commutable single family housing is driven by infinitely greater supply of suitable sites and recognition that many young renters mature and need more space to start a families.
Build to rent is a revenue-driven, design-led, long-term income concept that provides a tech enabled convenient lifestyle choice to today's savvy chic millennials who will pay 'market rent plus' to consume housing. Rent premiums being driven by the promise of service, a cult brand, environmentally conscious construction, cheaper bills, certainty of repair and maintenance being addressed, deposit alternatives, pet friendly, community offerings, monetised amenities and convenience. According to studies, the BTR sector is expected to be worth $544 billion in 2030, with a total PRS value of 1.5 trillion.
The focus is on total returns: with space planning, materials, fittings, furniture and furnishings expertly curated to drive the enhanced 'rent plus' model. BTR structures are purposefully designed for durability, for example component lifecycle longevity for minimal maintenance and ease of access/disturbance, and plant and equipment selection that considers UK stocks of spares and a spares list. Together the detail can drive an appealing return.
The no deposit option
With deposit alternative products from the likes of Reposit, Canopy and Flat Fair providing between 6 and 8 weeks rent cover for the price of ONE weeks rent the struggle to amass the normal 5 weeks rent as deposit on top of the first months rent in advance is lifted.
Accreditations such as 'wired score' can certify broadband as bronze, silver, gold, or platinum to give residents the surety that superfast tech connectivity is assured.
Security - you and your home
For you - BTR developments adopt secure by design principles as well as a community to look out for you. On larger developments add 24/7 security or concierge and a range of site staff. Secure bike storage with CCTV and lockers for performance bikes.
As your home - in a BTR scheme there is no fear that the landlord may want to sell up and throw you out, instead the resident gets longer leases and predictable rents (often index linked)
Room layouts need.to consider the placement of furniture and light paths to design in work from home spaces. These can comprise hinged fold away surfaces or work from home packs sold on site as well as specific co-working space in communal areas or work from home pods.
High energy efficiency
The norm is EPC ratings of B or above. Well insulated homes means cheaper bills and a socially responsible choice.
Quality finishes & A+++ appliances
Well designed homes are easier to clean, well chosen flooring is hygienic, storage space and increasingly work from home space is designed in. Sound proofed double glazing, well insulated homes, energy efficient heating and A+++ appliances are the norm.
No nonsense repairs
Reliable, professionally managed repairs and maintenance organised with staff on site to provide access simplify the hassle and inconvenience renters just don't want to be bothered with.
Deliveries (be in when you are out)
A service to receive and store parcels is coveted again reducing inconvenience.
Size and scale as well.as local competition will determine the amenities pricing strategy and whether residents should receive a wide range of amenities and services as part of their monthly rent which can adds significant value to residents' lives by eliminating the need to pay for a separate gym membership, co-working space, or bike storage.
For some amenities rationing will drive the need for amenity pricing, e.g., for parking, storage and housekeeping.
A BTR development cannot not have a wellbeing strategy. This can include spaces that promote health: gym and/or fitness studio, gardens and/or roof terraces as well as an app based wellbeing challenge or daily messaging programme and/or a programme of community get together events.
Space to entertain
A residents' lounge is a basic, private dining area and cinema rooms a plus and where space is short perhaps folding doors can transform a roof terrace into a summer outdoor cinema.
No fuss applications process
A tech enabled applications process is key. Moving home is widely reported to be an event second only to bereavement of a family member. Done well BTR offers a frictionless experience delivered by knowledgeable teams.
A social calendar & resident events
Good public transport links
Close to transport nodes. Accommodating bicycle storage, bicycle hire, bike wash and car clubs.
According to research by Dataloft and British Property Federation 'BPF' covering some 20,000 residents living in over 15,000 homes across 89 UK BTR schemes, 75% of schemes allow pets in some or all of their homes.
Value for money
BTR provides residents more than simply a home. It offers value for money as often with the cost of shared amenities is included in the rent. Research shows on average a 4% rent premium in schemes where recreational amenities are offered according to British Property Federation 'BPF' research.
A lifestyle that encourages tenants to stay in their homes and allows them to trade up or down as their circumstances change, resulting in brand loyalty. High-quality estate areas, green spaces, and the establishment of cafes and restaurants all contribute to the local economy and residents' well-being.
A modular opportunity
Rising material prices, skilled labour shortages and efforts to streamline house construction continue. Forward funded BTR provides an opportunity for modular construction as capital wraps their heads around it.
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