Letting agents should consider the benefits of participating in the growing Build to Rent (BTR) phenomenon, according to PayProp. Since 2012, Build to Rent schemes have aimed to provide thousands of units of purpose-built rental accommodation. The sector has government-backing – to the tune of up to £1 billion – and is already supported by institutional investors.
Extensive investment, rapid growth
BTR developments are managed by specialist operators and are typically designed to cater to the needs of modern tenants with on-site gym facilities, high-speed internet and concierge services.
Over the last few years, investment in the sector has been widespread and extensive. A report from the British Property Federation (BPF), Savills and the London School of Economics estimates that BTR will create almost 250,000 rental homes by 2030.
According to the BPF, there are now almost 100,000 BTR units – either completed, under construction or awaiting planning permission across the country.
Meanwhile, two of the sector’s largest operators, Grainger and Legal & General, have BTR investment capabilities of £850 million and £1 billion respectively.
“It’s clear from these figures that Build to Rent is a serious proposition with big financial backing from respected industry names,” says Neil Cobbold, chief operating officer of PayProp in the UK.
“With approximately 20,000 BTR units now completed across the country, and a number of schemes having officially opened their doors to tenants, now could be the right time for agents to consider how they could use the growth of this sector to their advantage,” he says.
Letting Agents could Benefit from Build to Rent Developments
How can letting agents get involved with Build to Rent?
A growing number of letting agents are already involved with BTR, and Cobbold says more potential remains for agents to investigate the options available to them.
“Some agents may see the growth of BTR as a threat to their business, but we believe it has opportunity for new partnerships,” he explains.
“Whether that’s positioning yourself as a rental market expert, offering advice to institutional investors, building beneficial relationships with developers and management companies or sourcing land and finding tenants, there are plenty of options.”
“The agents that don’t shy away from Build to Rent and look to be early-adopters could benefit the most and get access to the best opportunities,” he adds.
Replacement revenue for up-front fees
As the ban on up-front letting agent fees charged to tenants moves closer – being introduced next spring at the earliest – Cobbold reminds agents that they need to prepare to mitigate the effects of lost revenue.
“Whether it’s by streamlining or automating processes, pursuing alternative revenue streams or diversifying services, those that act decisively and with clarity of purpose are more likely to prosper in the long-term.”
Cobbold adds: “The government recently advised agents to ‘consider’ their business models in relation to the fees ban and exploring the opportunities Build to Rent might have to offer is one way of doing this.”
The future of affordable rental accommodation
Following the latest English Housing Survey, which revealed in January that the private rental sector now accounts for a fifth of all households and is the largest tenure in London, it’s clear that private renting is more important than ever to Britain’s housing landscape.
“The Build to Rent sector could be integral in providing affordable rental homes for the nation’s growing population of private renters,” says Cobbold.
“With no signs that the growth of tenant demand is going to let up any time soon, letting agents who involve themselves with BTR could be presented with more professional opportunities, come into contact with a higher number of tenants and make their business a valuable part of the nation’s housing future,” he concludes.