Could build-to-rent remove the worst private sector landlords and settle the housing crisis? Amro Real Estate’s co-founder, Ami Kotecha, believes it will. Many working in the industry see build-to-rent as a great opportunity for institutional, long-term investment. As societal and economic shifts change what renters want from property, it is believed that now is the ideal time to invest in the private rented sector.

A recent report from the Economic Affairs Committee in the House of Lords discovered that the British Government must boost its home building target by around 50 per cent in order to create 300,000 new properties every year. This will ensure house building can keep up with demand, and it seems that the Government is placing its faith in build-to-rent and institutional investment within the PRS (private rented sector).

With around half of those aged 25 to 34 years old now renting from the private sector, more older people and families are also choosing to live in single living accommodation. Ms Kotecha emphasised that renting homes should no longer be regarded as the world of dismal HMOs. As house prices continue to outpace wage increases, huge property prices will go on to prevent people, especially the young, from purchasing homes. Meanwhile, student debt and high rents compound the problem, which will result in estimates, such as those proposed by Knight Frank, which state that in England almost one in four households will be renting by 2021, becoming reality. This research also emphasises that the growth in renting is not merely just about affordability. The study discovered that 21 per cent of residents rent in order to live in a better area and 8 per cent enjoy the freedom from responsibility that renting offers over owning a home. 6 per cent required flexibility and mobility for work, while 6 per cent were currently downsizing. There will always be those who choose to rent rather than buy.

Ms Kotecha further argues that living within a build-to-rent property offers many amenities with a focus on service, which is a natural step for students who are used to living within university accommodation. She explains that traditional mortgage lenders are not adequately recognising the increase in freelancing and the need to move anywhere at short notice, meaning young professionals choose to rent rather than opt for home ownership.

While institutional supplies of rental property only represents a small percentage of PRS, it is growing nevertheless, alongside the market’s size. For this growth to continue, there needs to be a shift in the mindset of developers, from short-term capital gain to long-term management and rental income generation.

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