The rental market in the UK is undergoing major changes with a shift towards quality properties and a rise in build-to-rent accommodation. More people are renting and this trend is set to rise further because property prices put buying out of reach of many people. Younger people also like the flexibility that renting offers, while older people, such as early retirees and pensioners, are selling the family home to release equity and moving into rented accommodation. Many families also rent because they can live in a better school catchment area or in a better quality home than if they bought. All of these changes bring new opportunities for landlords looking to invest further in the rental market.
Last year, tenants paid a record £51.6 billion in rent, twice as much as 10 years ago, according to estate agency Countrywide. With demand rising faster than supply, this figure is set to rise. At present, five million UK households (21%) live in privately-rented accommodation. This figure is set to rise to 24% – 5.79 million – by 2022, according to a study by estate agency, Knight Frank. So investing in this sector seems sustainable for a good while yet.
The type of accommodation available is also changing, with a shift towards build-to-rents, where £50 billion has been invested funded by UK institutions and developers from Canada and the USA. These build-to-lets offer accommodation on a par with living in a hotel, with shared amenities such as a living area, bar, restaurant and gym. Not only do these provide attractive services for tenants but they also help to combat loneliness. An example of one build-to-let is a development of 550 apartments being built by US company, Greystar, in Croydon, south London. Residents will enjoy a roof garden, gyms, private dining rooms and a woodland winter garden among the amenities. Another development in Greenford, north-west London, will have 2,000 homes, many of which will be three bedroom properties aimed at families.
Tenants pay a premium for such extras, with a study by JLL showing tenants in build-to-rents are paying about 11% above the local market value. But many renters are prepared to pay for such amenities. A survey by lettings agency, Your Move, showed tenants are prepared to pay an average of £22 a month more for a creche onsite, £20 extra for a gym, and £10 more for a community garden or children’s play area. Younger urban renters, who are used to instant results, want hi-tech facilities, onsite amenities and convenience such as a concierge to pick up deliveries and location. They are prepared to pay extra for these services too.
As well as investing in these large-scale build-to-let developments, landlords can also use them as a blueprint for their own portfolio. When upgrading a property or investing in a building that needs totally renovating, it could be a good idea to see where communal spaces could be added either as a communal lounge or small gym. It may be possible to add terraces, balconies or a roof garden, while high-speed internet appears to be essential.
Ensure you are being transparent and fair – produce professional inventories, check ins, check outs, interim inspections, building inspections, risk assessments and more with InventoryBase.
Start your free trial here today.