4 Reasons to Consider Build to Rent for Your Next Real Estate Investment

Gallions Place, Plot A01.16, 4 Royal Quay Road, London, E16 2BW-19_blogimage1

Build to Rent is a business model that involves the construction of new developments expressly with the purpose of renting them out. They provide customers with some clear advantages like more flexible tenancies, specially constructed communal areas and dedicated on-site management teams. Their focus is on affordable luxury in accessible areas, and their rental price structures reflect this.

Even in the 21st Century, renting can have its pitfalls. A recent survey points to the fact that 40% of tenants live in homes where much-needed repairs or safety issues go unattended by their landlords. Just under a fifth of renters are insecure about their rights or status as they are on short-term leases. The obvious solution is to buy, but that is not possible for many. The rise of the Buy to Rent boom may be the answer to many prayers.

Gallions Place, Plot A01.16, 4 Royal Quay Road, London, E16 2BW-1_blogimage2

What is a Build to Rent Scheme?

Build to Rent developments are new build apartment blocks that have been built specifically for renters. Owned. Built and managed by a single landlord, they must comprise fifty or more separate units of accommodation. B2R new builds are seen as a major part of the ongoing quest to protect tenants from many of the sharp business practices that characterise the rental markets in some big cities.

With over 20,000 such developments in existence across Britain, there is vast scope for growth. Indeed, there are, at present, just under 120,000 Build to Rents currently undergoing construction, and that number is set to reach 200,000 by the end of 2025. This number is still quite short of the five million rental properties in existence, but the sector’s growth shows no signs of slowing down. So, here are four reasons to consider Build to Rent.

Gallions Place, Plot A01.16, 4 Royal Quay Road, London, E16 2BW-18_blogimage3

Four Problems that B2R Properties can Solve

  • Around 17% of all renters are on short-term leases, and these have a tendency to be fairly inflexible. B2R rents are much more flexible and give the tenant a much more secure outlook.
  • Again, nearly 17% of tenants complain that rent increases seem to be ad hoc and unfair. B2R developers factor in any rises at the beginning of the tenure and map them all out in the initial agreement. They can do this because they plan long-term.
  • One-third of renters experience delays and inflexibility when requesting essential repairs. B2R schemes have one landlord and one dedicated site manager, which greatly speeds up maintenance issues and processes.
  • Around 33% of renters experience what they consider exorbitant charges when signing a tenancy agreement. With B2R, tenants pay their deposit plus the advance rent, and that’s it: No inventory fees or charges for reference checks.

Also Read: Easy Home Renting with Finishing Touches

Gallions Place, Plot A01.16, 4 Royal Quay Road, London, E16 2BW-24_blogimage4

Any Downsides?

At the moment, all the B2R energy is centred around London, with over half of existing schemes to be found within the M25. Also, many of these builds are demographically specific, with some being exclusively designed for those over 55s, young professionals or pet owners. This narrows the choices even further. Lastly, the entry-level prices are up to almost 10% higher than comparable rental properties – a fact that excludes many who want to use B2R as a stopgap before buying a home.

As more renters consider the B2R option, there is bound to be a knock-on effect as developments compete for the most desirable tenants. Expect communal workspaces, laundry services, concierge, event spaces and gyms to become even more integrated, hi-tec and accessible – especially in the London area.

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