Simply put, Build to Rent refers to developments that are built specifically to be let. They are designed to cater to long-term tenants, with low maintenance requirements and are usually strategically positioned for transport connections to ensure they appeal to the target audience.
The concept of Build to Rent (BTR) has emerged as an influential force in the UK property market, reshaping investment opportunities and offering a new narrative in residential development.
Ideal for both seasoned investors and those contemplating their first foray into property investment, this blog shares the merits of including BTR property in your portfolio.
What is Build To Rent and How Does it Work?
As highlighted above, Build to Rent is an investment approach where properties are designed and built specifically for the rental market rather than to be sold to end users seeking a home. These types of properties cater to the burgeoning demand for quality rental accommodation across the UK.
These developments are typically owned by institutional investors or private equity firms who maintain management oversight, ensuring a high standard of living for tenants and a consistent level of service. In some instances, individual investors are offered the opportunity to secure units within a building, whilst the overall freeholder will usually retain a majority holding.
What sets BTR apart from other investment options?
By typically offering features such as 24/7 concierge services, fitness centres, communal spaces, and high-specification apartments, BTR developments strive to foster a sense of community and offer more than just a place to live, whilst usually being well-positioned for commuting to nearby economic hubs.
Why invest in Build to Rent?
The outlook for the Build to Rent (BTR) sector in the UK property market remains positive, with several indicators suggesting continued growth and expansion:
- Increasing Demand: The demand for rental accommodation in the UK is robust, driven by a variety of social and economic factors, including rising house prices, the flexibility desired by a younger workforce, and urbanisation. This suggests a sustained need for BTR developments.
- Government Support: The UK government has shown support for the BTR sector as a way to help address the housing shortage, particularly in urban areas. This is likely to continue, with potential policy and planning incentives to promote further growth.
- Investor Confidence: The BTR sector continues to attract domestic and international investors due to its potential for stable yields and long-term returns. Institutional investment, in particular, is likely to maintain its momentum as investors seek out assets with regular income streams.
- Professionalisation of Landlord Services: The rental market is moving towards more professionalism generally, and modern developments typically offer better property management, which can improve operational efficiencies and tenant satisfaction.
- Focus on Quality and Amenities: Tenants are increasingly looking for rental properties that offer high-quality living spaces and amenities. BTR developments are well-positioned to cater to these expectations, which could lead to premium rental rates.
- Urban Regeneration Projects: BTR is often a key component of urban regeneration projects, which are likely to continue as cities seek to revitalise and repurpose areas to meet housing and commercial needs.
When deliberating investment in the build-to-rent market, a comprehensive analysis of various critical factors is essential to ascertain the viability and potential profitability of such opportunities.
Investors should meticulously evaluate the geographical position and the quality of the development they are considering.
To be able to assess whether a Build to Rent property is a good opportunity an investor must factor the local rental demand, together with the trajectory of rental prices, and the competitive landscape of the local rental market together with the opportunity for capital appreciation.
Investing in Build to Rent Property
Build to rent can be a fruitful investment vehicle and offers investors an opportunity to be part of a forward-thinking housing solution.
To talk to Thirlmere Deacon about your property portfolio, get in touch.