How Build-To-Rent Is Changing The Market

As you can imagine, there are many large corporations and international firms that have established a base in the nation’s capital.

With almost nine million people calling London their home, it comes as no surprise that property is always in demand in the UK’s capital city. But, the idea of buying a home isn’t within the scope of most people’s budgets. With that in mind, growing numbers of individuals and families are seeking rental properties in and around London.

When it comes to property investment, London offers a variety of options that will almost guarantee a healthy return. An interesting trend that has been developing for a while now is the ‘build-to-rent’ sector. In a nutshell, this is where property investors pay developers to construct new homes for them that immediately get rented out to prospective tenants. So, how is the build-to-rent sector changing the landscape in the property market?

The End of Help to Buy Schemes

At the end of November 2019, we saw the Help to Buy ISA scheme closed to new applicants. 2023 also signals the end of the Help to Buy equity loan scheme. Because of this, Londoners are already starting to find it difficult to get onto the property ladder. At present, the average price of a typical house in London is just under £658k according to Zoopla. As you can imagine, such properties aren’t within the means of many individuals and families living and working in the nation’s capital.

The Help to Buy schemes were designed as a way to help such people and others outside of London get on the property ladder. A small deposit meant that the dream of owning a home in London became a reality for many people. Due to the demise of those Help to Buy schemes, many Londoners are faced with the prospect of renting again.

As a result, there is increasing demand for rental properties both in central London and surrounding boroughs. Property investors see this as an opportunity to put their money into build-to-rent investments. According to the British Property Federation, the build-to-rent sector in the UK as a whole has grown by 20% year on year. London alone accounts for 51% of all build-to-rent properties in various stages of planning and construction.

Rising Government Housebuilding Targets

With an ever-increasing population in the UK, it makes sense to build new homes for people to live in. There has always been a strong demand for affordable housing, and the build-to-rent sector aims to provide solutions for thousands of prospective tenants.

There is currently a shortage of available properties on the market, which goes some way to explaining the steadily rising property prices across Britain. London, in particular, has a substantial need for new homes. With more people wishing to live in the capital, demand is extremely high for rental properties in all parts of London.

When Theresa May was Prime Minister, she pledged there would be at least 300,000 new homes built across the UK each year. Such an ambitious goal would clearly tackle the growing housing crisis in the country. But, the harsh reality is such a target isn’t likely to be achievable at present. Developers have come across stumbling blocks such as complex planning rules and regulations, delaying the build of new houses in the capital and beyond.

The Demand for High-Quality Rental Properties

When it comes to renting a property in London, prospective tenants have a desire for access to high-quality homes. It’s no secret that rental prices in the capital are high compared to other parts of the UK. As such, when tenants have to pay a premium for their rent, they want access to a premium home in return.

New build properties are very energy efficient for a start and help to save tenants money on their utility bills. Those brand new homes are also better suited to the demands of today’s families. Examples include better laid out rooms, increased electrical points in each room, and off-street parking.

Tenants prefer new build homes as they also won’t have to worry about issues typically associated with older properties like damp, subsidence, and unsafe gas and electricity infrastructure.

Choosing the Right Property for Tenants

When it comes to getting on the buy-to-let property ladder, it can often make sense to invest in build-to-let properties. Such abodes tend to have more of a community living focus and have shared spaces like gardens and gyms, for example. If you’ve got some money to invest in such properties, how can you choose the right ones for your tenants? The first thing to do would be to use a buy to let property finder tool. Doing so means you can seek out the best properties for both your prospective tenants and your budget.

Next, you should determine what is most likely to attract the tenants you want in London. You will need to look at locations that offer easy access to employment opportunities for a start. It’s also vital there are good public and road transport links, and that the area is well-served with a variety of amenities. They are extremely attractive selling points to prospective tenants, especially young professionals working in the city centre.

Believe it or not, Internet access options and even WiFi facilities are also important when targeting renters in London. You may not realise it, but more people are working from home these days. Growing numbers of employers let their staff work from home, and the self-employed obviously work from home a lot of the time too. Safety is another important consideration to make when deciding on your next investment location. The last thing tenants want to do is worry about a high risk of getting mugged or worse in their local area.