You’re thinking about buying into Build to Rent, but aren’t sure how to do it or if it’s a good fit for you? Our guide on reasons you should invest into Build to Rent will help you understand the potential risks and benefits of investing in the sector.
Build-to-Rent developments are increasing across the UK because of the growing demand for high-quality specifically designed rental homes for young professionals and those over 50s. This fast-growing sector offers tremendous potential for property owners and commercial landlords, so that you get it right.
What exactly is Build to Rent?
BTR, also known as Build to Rent (BTR) is the term used to describe the method that allows residential properties to be specifically designed for the rental market for private landlords. Most of the time it is carried out by major property development firms as well as commercial landlords, investors and.
Build-to-rent developments typically include 50 or more houses and are all run by one landlord. These developments often come with desirable perks like gyms in the homes as well as entertainment facilities, as well as sophisticated security systems.
The Trend of Building to Rent
The Build to Rent industry within the UK is growing. According to property experts Knight Frank, £50 billion will be invested in the sector by the year 2024 to meet the increasing demand for private rental sector.
We’re all conscious that rental market is expanding. The rising cost of housing and the new trends in working have created a greater number of tenants searching for long-term, suitable rental properties.
The decline of home ownership has led to an older, professional tenant population searching for a high-quality rental that is equipped with all modern amenities.
What is the Build to Rent Work?
In general, a Build-to- Rent project is owned by a major institution, like a pensions or banking company and is managed by a leasing agency.
Investors are eager to profit from reliable rental income and long-term growth. Certain Build To Rent Schemes are also assisted by the Government to assist in the building process as well as supporting infrastructure.
The principal participants of the Build to Rent process include;
Investors in Build to Rent
Developers of Build to Rent
Agents for letting out Build to Rent
Commercial landlords
If you are looking to buy Build to Rent property there are many avenues to consider, one of them to do so is to go via one of the major Private rental builders.
Benefits of Build to Rent Properties. Benefits of Build to Rent Properties
Based on Savills, Build to Rent investment was £2.6 billion last year, indicating that it could be profitable that commercial tenants can take advantage of. There are plenty of exciting possibilities for landlords who invest into Build-to-Rent. Here are a few advantages
Tenancies that are longer are not uncommon (3 years and above)
High tenant demand
Rents that are higher (around 11% more than the average rental)
Affordable rental income and potential growth
The landlords have control over their investments
Investment rewards for long-term investments
There are many advantages for tenants that will help in advertising and filling vacant rental homes much more simple;
More choices of housing
High-quality, purpose-built buildings that have particular amenities like gyms , entertainment and fitness facilities
Access to convenience services like security, laundry , concierge and more
Modern, sustainable buildings
Bills are usually are included
Furnished
On-site management
Inspires regeneration in the the surrounding regions
The Risks of Building to Rent
All investments carry the potential for risk. Before making a decision it is important to know the risks involved and how you can manage them.
Construction Risks
Construction can be a risky enterprise It is not without risk, and any kind of construction project could go wrong and take more time than anticipated which can result in higher cost to the financials.
Planning Permission Questions
A relatively new concept the process of obtaining planning permission to build-to-rent may take longer, resulting in higher costs and decrease in rental income.
No-Position Periods
As a owner, you could be delayed in receiving total rental income when the building gets filled. To prevent long periods of void you can set up a tenant sign-up system even while the construction is being constructed. You could also develop the project in stages so that rent income is generating during the entire process.
Drawbacks for Tenants
It is also crucial to think about the drawbacks for tenants in relation to Build-to-Rent, as it will allow you to determine the ideal tenant to target and reduce the risk.
A few disadvantages for tenants are;
The majority of Build to Rent developments target older tenants or young professionals and are not likely to appeal to families or those with lower income renters.
This kind of property is more costly for tenants.