Insights from the National Residential Investment Conference

Today, I had the opportunity to discuss the rental market at this year’s sold-out National Residential Investment Conference in London. One of the key topics highlighted during the event was JLL’s latest research on the institutional (non-Housing Association) sector.

JLL Research: Key Findings on Build-to-Rent Developments

JLL analysed seven residential developments, totaling 911 units, with an average scheme size of 130 homes. Their research revealed:

• Average gross to net is 26.6%
• High-quality build-to-rent developments achieve a 9% rent premium
• Rental growth stands at 3% annually
• The average tenant is 31 years old and earns approximately 30% more than the UK mean salary
• Rent-to-income ratio for these tenants is 28%, compared to the UK’s over-burdened rate of 40%

Investment Yields Across Different Locations

JLL also provided insights into net initial yields across various regions:

• London Zones 1-2: 3.5%
• London Zones 3-6: 3.75%
• Regions: 4.15% - 5%
• Glasgow: Highest at 5%

These figures highlight the continued attractiveness of rental investments in major urban areas.

The Changing Demographics of UK Households

The conference also shed light on shifting UK household trends:

• Marriage rates are declining
• Couples are having fewer children and starting families later
• Two-thirds of UK households (17 million) now do not contain children

These changes indicate a growing demand for homes suited to couples without children, retirees, and single sharers.

The Rise of Micro-Living and Co-Living

As a response to these demographic shifts, micro-living and co-living developments are expected to gain more prominence. One notable example is The Collective at Old Oak, a purpose-built co-living development in the UK. While some may compare micro-living to HMOs, the reality is quite different. Unlike traditional HMOs, these developments focus on high-quality, purpose-built spaces with shared amenities. The model takes inspiration from 1930s mansion blocks, which once included communal dining spaces instead of individual kitchens.

The Future of Shared Living Spaces

At Ringley, we manage some older mansion blocks that have lost their original shared amenities over time. Looking ahead, well-designed co-living spaces should emphasize community living beyond just eating areas. Future developments should prioritize thoughtfully planned common areas, ensuring shared spaces enhance the overall living experience.