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Build to rent (BTR) is a growing sector in the UK property market. As the name suggests, build to rent developments are built specifically for the purpose of renting, with the aim of providing high-quality, long-term rental accommodation to tenants.

According to estimates, there is a need for an additional 232,000 to 300,000 housing units per year in the UK, a level not seen since the late 1970s. However, on average, only half of this target is being met each year.

Because of this severe shortage of housing, some are speculating that more people in the UK will rent rather than own their homes in the future. This is backed up by evidence showing that the average age of first-time home buyers is continuing to rise. This could be partly due to the fact that rental properties are often the only viable option for many young people.

So then if the traditional sale market is not meeting the needs of the younger demographic who are increasingly choosing to rent affordable apartments in urban areas, build to rent developments offer an opportunity to provide more housing options that cater to a broader demographic. Not only that, but they can create even more flexible choices for local communities. As a result, BTR properties are becoming much more favoured for their convenience to residents and speed to market for developers and build to rent investors.

However, with this growing industry comes a need for compliance to ensure the safety and satisfaction of tenants, as well as the protection of property owners' investments.

What is build to rent (BTR)?

Build to rent (BTR) is a growing sector in the UK property market that involves the construction of purpose-built rental accommodation. This model of housing is designed specifically for renters, with the aim of providing high-quality, long-term rental accommodation to tenants.

Traditionally, the UK property market has been dominated by owner-occupied housing and more traditional forms of rental accommodation. However, in recent years, the demand for rental accommodation has grown exponentially, driven by factors such as changing lifestyles, a shortage of affordable housing and a rise in the number of people choosing to rent rather than buy in response to rising mortgage rates and the more recent cost-of-living crisis.

According to the UK Government, in the past decade, there has been a trend towards private rental homes, particularly among younger generations, leading to a decline in home ownership. The demographic of 25 to 34-year-old professionals saw a rise in private renting from 63% in 2010 to 69% in 2020. People aged 35 to 44 years old saw the greatest increase in private renting, rising from 17% in 2010 to 26% in 2020.

As such, the rise in popularity of BTR can be seen as a response to these trends and changing demands. Rather than repurposing existing properties for rental use, build to rent involves the construction of purpose-built properties specifically designed for the long-term rental market. BTR properties typically include features such as high-quality, modern interiors, communal spaces and amenities for tenants, along with professional property management services.

One of the main advantages of build to rent is that it offers long-term security of tenure to tenants. Unlike traditional rental properties, where landlords may need to respond to changes in the market, BTR properties are designed to provide long-term rental solutions, with the aim of creating stable, sustainable communities. Community is the keyword here, as it is often thought that BTR comes with a certain “philosophy” that facilitates social wellbeing.

For property investors, BTR offers a number of benefits, too. Firstly, it offers a predictable income stream, with rents paid on a monthly basis and, more typically, longer lease periods than traditional rental properties. Additionally, build to rent properties are often built in high-demand locations, providing an opportunity for capital appreciation in places like up-and-coming commuter hubs.

BTR is also seen as a more sustainable form of housing, with properties built to higher-than-normal environmental and sustainability standards. This includes measures such as energy-efficient appliances, renewable energy sources and sustainable building materials.

Retrofitting older housing stock to become sustainable, such as the pre-Victorian buildings prevalent throughout the UK, is an expensive task, so BTR is great for getting things right from day one, as it were.

In order to support the growth of the build to rent sector, the UK government has introduced a number of supportive measures, including tax incentives for developers, planning reforms, and support for institutional investment in the sector. This has helped to drive investment in BTR and support the construction of new properties across the UK. However, along with some of these supportive measures, there’s one major BTR requirement to be mindful of.

What are the build to rent requirements?

When it comes to build to rent properties, perhaps one of the biggest requirements is sustainability. This can be achieved through the use of industry-standard frameworks like the BREEAM (Building Research Establishment Environmental Assessment Method) certification, which sets benchmarks and guidance for sustainability.

In a nutshell, BREEAM is a certification program that provides a recognised standard for sustainability in the built environment. It assesses the environmental and social impact of buildings throughout their lifecycle, from planning and construction to operation and maintenance.

BREEAM is important because it provides a comprehensive and objective assessment of a building's sustainability performance. It evaluates a wide range of factors, including energy use, water consumption and waste management, as well as things like the use of sustainable materials. The certification can help property owners and developers improve the sustainability of their buildings, while also demonstrating their commitment to sustainable development.

In the context of build to rent properties, BREEAM certification is particularly relevant as these properties are typically owned and managed by institutional investors with a long-term view. By achieving BREEAM certification, build to rent properties can demonstrate their commitment to sustainability and their ability to deliver what they promise – high-quality, energy-efficient homes. This is crucial for attracting tenants who are nowadays increasingly interested in aligning themselves with environmental considerations.

BREEAM applies to build to rent properties in the same way as it does to other types of buildings. The certification process involves a thorough assessment of the building's sustainability performance, based on a set of criteria that are specific to the building type. For build to rent properties, BREEAM assesses factors such as the provision of amenity spaces, access to public transport, and the management of communal areas.

Is BREEAM certification mandatory in the UK?

BREEAM certification is becoming increasingly essential for buildings and developments across the UK. In fact, up to 70% of local authorities across the country require a BREEAM certification, making it a crucial factor to consider when undergoing building work and development. Failing to comply with BREEAM standards can prevent developers and property owners from carrying out any building work that is not compliant, which can be incredibly costly for those stakeholders.

Under the government’s Construction Strategy, it is mandatory for all public projects to undergo an environmental assessment, with the aim of achieving a BREEAM rating of ‘Excellent’. The demand for sustainable buildings is increasing year-on-year, making a high BREEAM rating crucial for the attractiveness and value of a property. Achieving a high BREEAM rating can also help to lead to quicker sales due to the desirability of purchasing properties that meet some of the standards contained in the BREEAM framework.

Because the assessment includes factors such as efficient heating systems, low water-consuming components and energy-efficient lighting, BREEAM can theoretically result in lower running costs, as well as cheaper maintenance and refurbishment costs for property owners and landlords.

Above all, BREEAM provides social benefits. A survey carried out by the UK Green Building Council found that more than 71% of individuals who used BREEAM assessments for their building development found it to be socially beneficial. The most common reason for this was the enhanced image for both the company and the building due to the attainment of BREEAM certification.

Protecting BTR investments for the long-term

With all that promise, it’s important that build to rent assets are maintained over the long term. However, this often raises complications, as build to rent developments typically contain a larger number of units than the average multi-unit rental property.

Therefore it’s important for BTR property managers to manage their assets at scale, and this includes the entire process of reporting, from inventories to interim inspections to check-out reports.

Keeping track of the inventory and ensuring that everything is accounted can be a time-consuming and complex task for a single unit. Being able to deploy an inventory reporting process from the outset is vital.

BTR developments are designed to offer a seamless and hassle-free living experience for tenants, after all. This means that any issues or maintenance needs should be addressed promptly and efficiently throughout the tenancy.

With a detailed inventory report in place at the beginning, property managers can quickly identify any damage to the property or furnishings and take the necessary steps to rectify the situation, whether that’s during an interim inspection or at the end of the tenancy. This is where property inventory software comes into play, being a time-saving and scalable solution that can adapt with and feed into the growing needs of an evolving build to rent portflio.