Buy-to-let may have failed an entire generation, but here’s why build-to-rent is the product tenants want – and the asset investors need, too.
A new sector for a market that’s been demanding and waiting for it for too long.
Buy-to-let failed an entire generation, a product that could not evolve with the needs of the people it was intended for.
For years tenants have been waiting for a solution. A product that syncs with their lifestyle. A product that eliminates the need for compromise. A product built for them.
Build-to-rent is that product.
21st century design replaces antiquated homes once intended for owner occupiers. Central locations replace locations on the outskirts of town. And, crucially, service and management from on-site professionals usher out unreliable, unregulated levels of care from private landlords.
Here are 4 reasons why build-to-rent is the new home for the UK’s expanding rental market – and why it’s also the future of property investment in the UK:
1. A product designed for modern tenants
For a generation that is no longer as enamoured with ownership as their parents, UK tenants today have no hesitation to demand and pay for the highest quality accommodation with no expectation of ever owning it.
Buy-to-let once plugged a gap for a tenant that rented while en-route to ownership. Compromise on quality, facilities and location was necessary. When this previous generation moved out and were replaced by Generation Y, a generation that doesn’t want to compromise now that renting is their preferred accommodation choice, buy-to-let became a hindrance rather than a solution.
But every aspect of build-to-rent has been constructed with today’s end-user in mind. 21st century design. Exclusive amenities such as gyms and communal cinema rooms in the same building. Locations in the city centre close to friends and employment hubs.
These are the value drivers that tenants will pay a premium for. Where once previous rental options could only offer one or a combination of these things, build-to-rent delivers all of them.
2. An experience that makes people put down roots
By taking rental accommodation from the outskirts of town, away from neighbourhoods of owner-occupiers, families and friends, and putting them in city centre locations, in developments with people that have similar interests and values, build-to-rent creates communities, not just homes.
Generation Y values experiences over ownership. If they’re surrounded by neighbours of similar ages and who have a shared mind-set, they’ll naturally start to build relationships and friendships, and share experiences that will last a lifetime.
If their home delivers an experience that cannot be replicated in any other rental home nearby, why would they want to leave?
3. The service tenants want. The regulation the government wants.
Around 30% of current rental homes are owned and managed by ‘accidental landlords’. These are people that let their home due to circumstance, or who have a long-term goal of making money, rather than providing the highest quality standards for their tenants.
Now renting has become an active life choice, this level of management is no longer acceptable.
Tenants don’t want problems to be resolved by off-site landlords with varying degrees of reliability. They want all issues resolved promptly and efficiently by on-site management teams. And just as a Netflix subscription has changed the way they watch movies, this is a service they’re willing to pay for if it enhances their living experience.
This level of regulation that build-to-rent will bring to the market is also the standard the government wants to see, too. Acutely aware of how many Britons now depend on the rental sector to provide a home, it wants to see a fall in tenant/landlord dispute numbers. If build-to-rent becomes the new rental model, this will undoubtedly happen.
4. Build-to-rent is the future of UK property investment
Tenants want it. The government wants it. And, finally, investors are beginning to realise that they want it, too.
Demand for rental accommodation has increased by 17,500 per month over the last 10 years, as more move away from homeownership and turn to the private rented sector instead. If build-to-rent is becoming the number one rental product for this expanding market, it’s an investment opportunity that’s simply too big to ignore.