Around 13 million people are renting in the UK, and the number will only increase in the coming months and years. With one in five of us renting, the need for a robust rental market is essential. It’s also crucial that renters have a wealth of options when it comes to where they live.
Build to Rent (BTR) is the latest entry to the private rental market, and it’s growing exponentially. It provides homes exclusively designed for renters, facilitating an approach to the 21st-century lifestyle with modern apartments, shared social spaces and holistic living.
The Build-to-Rent sector will grow further with Generation Rent, as we look towards a landscape where private renting plays an increased role in the UK housing market. But how did we get to the current renter-focused scenario, and what aspects of renting will contribute to the future of the market?
What has led to an influx of renters?
Generation Rent was born out of an affordability issue, with house prices in England rising 173% in the last two decades. Combine this with the economic uncertainty taken from the financial crash of 2008, and buying a home became an impossible task for many people.
Other factors were at play too. Even with reforms to stamp duty that meant first-time-buyers paid less and ISA schemes created to help buyers get on the property ladder, affordability still played a fundamental issue.
Concerns with Brexit caused stagnation to the housing market, with even those who could get on the property ladder more inclined to wait until the fallout out of the three-year wrangle before the UK left in early 2020.
Then, when the market looked to be on the rise again, Covid-19 sent it into even further uncertainty. Throughout this entire timeline, the number of homeowners fell while the level of renters was on the rise.
A boom in the private rental sector
By 2018, five million people rented from a private landlord, more than twice the number of renters in 2000. Affordability is the primary driver for the uptick in renters, but it’s not the sole reason. The UK’s obsession with owning bricks and mortar is very much a set of principles born from the Thatcher years.
However, over time, the desire to rent has become a lifestyle choice. For many, choosing not to own a home frees up more money for luxury expenses, such as buying the latest technology or enjoying a lavish holiday.
People are valuing life experiences over long-term stability. They’re doing it by seeking affordable rents while finding value for money in the market. And the private rental sector is booming as a result with no sign of a slowdown.
The growth of Build-to-Rent
Increased demand for private renting has led to the growth of Build-to-Rent. A BTR development consists of multiple apartments in the same building with shared social spaces, such as fitness centres, lounges and, in some cases, co-working spaces. The entire building is designed specifically for renters.
By quarter four of 2019, more than 40,000 Build to Rent developments were completed, with a further 36,000 under construction and 75,000 in planning. The increase in numbers won’t come as a surprise to anyone who has cast their eyes over the rental sector.
Build to Rent wasn’t born out of a coincidence: the more renters come to the market by choice, the higher their demands for good-quality homes. Tenancies are lasting for an average of just over four years, so they expect excellent living conditions.
Build to rent is designed to facilitate those needs with hotel-like living consisting of a community-led approach to renting a home.
A holistic approach to living
The ethos of Build to Rent is built off its exclusivity for renters, with their needs central to the cause. The Millennial lifestyle is encouraged, with 24/7 on-site gyms, yoga rooms and even five-star spas with swimming pools and treatment rooms.
Social spaces are designed to bring people together, especially in big cities, where it’s easy to feel lonely. With Build-to-Rent developments, resident lounges, cinema rooms, libraries and even dining spaces curate a sense of community.
For many renters, the idea of community taps into their desires for a holistic living experience. Some Build-to-Rent developments even have waiting lists, so much is the demand with modern-day renters who have bought into the lifestyle before even moving in. So far, Build-to-Rent developments are succeeding in bringing more social interaction into their buildings.
Millennials and Generation Z will make up the crux of renters in the coming years. These also happen to be a demographic that relies heavily on tech-led initiatives that make their lives easier. And in some cases, Build to Rent has matched that desire for technology.
The majority of these developments are tied into a central app that allows renters to manage some aspects of their in-life tenancy. This includes reporting repair issues around the home and contacting front-of-desk employees, as well as booking social spaces like coworking areas or screening rooms for private use.
These tech-led approaches are still in their infancy, however. On the plus side, it’s encouraging to see an emphasis on creating a more transparent and seamless process for renters. But some aspects still need tweaking, such as the ability to have a full overview of rental documents, as well as tieing everything into the same ecosystem where property managers and contractors are easily accessible.
Adopting the same approach in other rental sectors
Build to Rent’s benefits look promising, but what about other sections of the private rental sector? So far, single-properties, larger portfolios owned by landlords and multi-family offices don’t tend to offer the same technology-led initiatives found in some BTR developments.
Yet, and adoption of these practices makes the landlord and tenant’s life easier. Tenants would much prefer having a central system where they can manage their in-life tenancy, while landlords benefit from having a completely transparent view over their portfolios, including how it performs as an investment.
Build-to-rent and the future
Build-to-Rent feeds into a holistic, community-led living, which has its own appeals. But many renters like options, which means other sectors in the rental market have just as much of a role to play in providing good-quality homes.
Portfolio owners, private landlords, and multi-family offices can take a leaf from the Build to Rent book and its emphasis on technology while creating a transparent process that gives landlords and renters an intuitive way to manage and live in their homes.
Adapt to an ecosystem where everything happens in one place, with an easy contact and reporting system, in the world of portfolio owners and private landlords, and the entire rental market will be well on its way to modernisation that fits in with 21st-century renting.