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What is Build-to-Rent, and how will it affect Private Landlords?

Over a decade ago, a comprehensive report into the Private Rented Sector concluded there was an urgent need for institutional investment into private rented homes in the UK.

Whilst the apparent intention may have been interpreted as a plan to squeeze private landlords out of the market, the reality is that Build to Rent has emerged as a brand-new housing option, sitting alongside the existing choice for private rented tenants.

Compared to the Private Rented Sector, institutional investment is in its infancy – with an estimated 30,000 homes built so far, this is less than 1% of privately rented homes. However, the sector is set for future growth with an estimated 140,000 units either in construction, or in the planning process.

So just what is the difference between the traditional Private Rented Sector, and Build to Rent homes:

Location:

Predominantly Build to Rent schemes are located in cities – with London dominating, followed by cities like Bath, Birmingham, Liverpool, Manchester, Glasgow and Edinburgh.  Whilst these are all traditional rental hot-spots, they are also locations where supply doesn’t typically meet demand.

Types of homes:

Described as ‘hotel-type’ schemes, Build to Rent units offer concierge services – such as dog walking, and dry cleaning. Some have gyms onsite, whilst others will offer hot-desking facilities for home-workers.

Price:

These homes are appealing to a different type of tenant and they’re expecting to pay a premium above average rents.

Are traditional landlords about to be squeezed out?

We don’t believe so.

The demand for rental homes continues to outstrip supply – by a significant margin. Any addition to the housing stock in a particular location is only likely to reduce the pressure on the current market, rather than challenge it.

The beauty of the private rented sector is that high quality, family homes can be found in all neighbourhoods – often thanks to accidental landlords who chose to rent out a former home, or property they inherited.  This means that in towns and cities up and down the UK, a growing number of families are able to rent homes close to the school they’ve chosen their children to go to, or in the villages they grew up in themselves.   

We welcome investment in quality rental homes which continue to drive up standards in the UK’s rental stock, but we don’t feel Build to Rent poses any threat to private landlords.

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