With more people looking at long-term renting rather than seeing it as a stop-gap before they buy property, the housing shortage is becoming increasing acute. As well as Generation Rent, who cannot get on the property ladder, there are also older people who have stepped off the ladder, either because they are downsizing and want to free up cash or they have divorced and cannot afford to buy on their own. So why is there such a need for build-to-let properties?
Whatever the reasons, there is an urgent need for many new homes including build-to-rent properties, especially in locations like London. The UK’s largest build-to-rent development is going ahead in Wembley Park in London, where 7,600 homes will be built. The government is providing £65 million, in the form of a loan, towards the project, which is being match-funded by Wembley developer, Quintain.
Across England, 80,855 build-to-rent homes are either planned or already completed. Estimates suggest investment in the private rental sector could grow to £70 billion by 2022, providing a further 15,000 properties each year. It is also forecast that London will have a 65% share of the investment, according to research by Knight Frank, with the other 35% being shared around other UK regions. The research also showed that young professionals make up the largest proportion of households in the rental sector. However, the number of under-25s is set to increase in the next five years, along with an increase in older households.
It is also expected that institutional investment in the build-to-rent sector will grow significantly. Opportunities have opened up in the rental market as a result of the hike in stamp duty and curbs on relief on mortgage interest. It is an attractive proposition for institutions, such as pension fund holders, because of its long-term potential.These purpose built, build-to-rent accommodation blocks will appeal to tenants on so many levels. They will be built to the latest specifications, less likely to need repairs and they will be energy efficient, so bills will be cheaper. Some blocks also have their own gyms, swimming pools, communal gardens or roof terraces, and free wi-fi, which are also major attractions to residents who will be happy to stay in the same place for many years. That’s why it’s seen as such an attractive investment, particularly in buy-to-let hotspots such as London, Liverpool, Leeds and Manchester. Customer demand is only expected to go up and not down for years to come.
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