What is build to rent?

Last updated: May 2024 | 3 min read

Build to rent refers to newly constructed housing communities that are designed and developed exclusively for rental purposes. These properties offer extended lease terms, shared communal spaces tailored for community living and an on-site management. This article provides information to help comprehend the build to rent concept.

Build to rent (BTR) is an innovative way of renting. It helps bypass some of the issues that emerge from a rental property acquired traditionally, such as the landlord not doing enough to deal with any property-related issues for example, damp in the house or short-lived tenancy contracts. Even though it may come at a higher premium, BTR's innovative community approach makes it a sought-after option for contemporary renters.

In a detailed article, you can also learn about the rent to buy scheme.

What exactly is 'build to rent'?

Build to rent refers to residential properties specifically constructed for renting rather than selling.

These developments offer tenants long-term rental property agreements, providing stability often absent in the private rental market.

Build to rent properties are usually owned and managed by one company, ensuring a more streamlined tenant experience and consistent standards across the development.

This concept stands out in the UK housing market: build to rent developments often feature modern amenities and shared spaces designed to foster a sense of community among residents.

By focusing on renters' needs, properties offer an alternative to traditional private rental options and help meet growing housing demands.

Origins and evolution in the UK

The origins of build to rent in the UK trace back to the early 21st century, growing from a need to provide more rental housing. This was a response to changing demographics, economic factors, and the evolving preferences of those who rent homes.

Historically, the UK property market centred around buying. However, shifts in affordability, lifestyle choices, and job mobility have seen a rise in renting. (If interested in buying, you can find more details in our article on buying a house.)

Developments in national planning policy framework and the growing involvement of institutions like the British Property Federation catalysed the growth of the build to rent sector.

The market has evolved with a focus on providing affordable rented homes as part of wider developments. Through collaborations between rent developers, local authorities, and planning bodies, build to rent has grown into a fast-growing sector within the UK's rental market. It caters to the need for high-quality, professionally managed rental options.

The evolution of build to rent is marked by a growing emphasis on creating not just homes, but also communities. This trend includes developments offering communal spaces, green areas, and amenities like gyms and event spaces.

These features differentiate BTRs from traditional rental options and reflect the modern tenant's desires for convenience and quality of life.

Comparing traditional rental properties to BTR homes

Unlike traditional rental properties, normally owned by private landlords with diverse portfolios, build to rent properties are developed and managed by a single entity. This ownership structure ensures a uniform quality and service standard across these homes.

You'll often find build to rent homes in larger developments, designed with the specific needs of renters in mind. On the other hand, traditional rental properties can range from individual flats in converted houses to purpose-built apartments, with management varying significantly between landlords.

BTRs offer additional amenities like concierge services or communal living spaces. Traditionally rented properties are often scattered across different locations and lack the communal focus of build to rent developments.

BTR schemes frequently offer longer tenancy terms, providing more stability compared to the traditional six to twelve-month contracts commonly found in the private rented sector.

The impact of build to rent on the UK rental market

The emergence of build to rent developments has begun reshaping the landscape of the UK rental market. BTR schemes contribute to providing affordable housing in urban areas, where the demand for quality rental homes often exceeds supply.

Such developments align with the national affordable housing policy, aiming to balance the rental sector's growth with housing affordability.

By introducing more professionally managed rental homes into the market, build to rent developments can lead to enhanced living experiences for tenants. These schemes often prioritise creating a sense of community among residents.

Build to rent developments often incorporate public spaces, green areas, and other communal facilities, increasing the local community's overall quality of life.

BTR operators adhere to the International Valuations Standard Committee's guidelines, promising more transparent and fair practices concerning rent increases and service charges.

Amenities and facilities unique to BTR

Build to rent properties often stand out for their extensive amenities. Residents in build to rent developments usually have access to facilities like gyms, rooftop terraces, and lounges. These features create a more community-focused living environment.

Modern conveniences, such as parcel collection services or housekeeping, are common. Their presence aims to simplify daily life for tenants.

Some build to rent schemes take amenities a step further. Luxuries like on-site cinemas, concierge services, and high-speed broadband come standard.

Green spaces and recreational areas often feature, too. These cater to a variety of lifestyle needs, encouraging a balance of social interaction and personal relaxation.

Many build to rent developments focus on fostering a sense of community. Regular social events and activities are arranged for residents. This approach helps establish a more connected, supportive living environment. Homes in a build to rent development brings like-minded people together.

How design and management differ in BTR properties

Build to rent developers usually aim for modern, high-quality construction. These properties often feature contemporary design elements. Thoughtful layouts maximise space and light, enhancing living comfort. Many developments also focus on sustainability, incorporating eco-friendly materials and energy-efficient systems.

Management is another area where build to rent properties shine. A single entity manages these developments. This approach contrasts with the multiple landlords seen in standard rental markets.

Consistent, professional management means issues are generally addressed more promptly and efficiently. Renters benefit from a more streamlined and reliable service.

Build to rent management teams frequently provide additional support and services. These might include maintenance and repair services, sometimes available 24/7. This level of service ensures a hassle-free living experience for tenants.

In build to rent developments, management teams also play a role in community engagement. They often organise and oversee events and initiatives to strengthen the local community spirit. This proactive role in enhancing tenant experience sets build to rent properties apart from their counterparts.

Build to rent (BTR) developments in the UK have seen a notable rise in recent years. This surge connects directly to changing lifestyles and housing needs. Particularly in urban areas, the demand for rental properties that blend convenience, modernity, and community living has driven this growth.

Surveys show a significant shift towards renting rather than owning, especially among younger demographics and professionals in cities like London and Manchester. You may want to have a look at our detailed article on whether buying or renting would be a more suitable option for you.

In response, construction companies and developers are increasingly focusing on BTR projects. Unlike traditional rental properties, these developments are specifically designed for renters. They often include a mix of private market rent homes and affordable private rent units.

The construction of BTR properties continues to flourish, with numerous projects underway in various UK cities, particularly in East London.

Find more information on UK government's website.

Future of build to rent in the UK

Market analysts expect sustained growth in the BTR sector, driven by continuous demand for affordable and flexible housing options.

This trend is likely to be bolstered by the ongoing challenges many face in stepping onto the property ladder. The combination of high deposit requirements for owner occupation and the appeal of community-centric, professionally managed rental homes underpins this prediction.

The emerging trends such as family-friendly tenancies and longer tenancy agreements in BTR developments indicate a maturation of the sector, appealing not just to young professionals, but also to families and older renters.

With local authorities increasingly recognising the community benefit of BTR schemes, it's likely that future planning guidance will continue to support this growth. The sector's adaptability to changing demographics and lifestyle needs will likely keep it at the forefront of the UK's rental market.

How local authorities influence build to rent developments

Local authorities impact build to rent (BTR) projects by setting affordable housing targets and releasing land for development. Their partnerships with developers can speed up project completion, enhancing the variety of rental choices.

These authorities ensure BTR developments adhere to local market rents and living standards, often mandating participation in recognised ombudsman schemes for tenant protection.

Planning policies and their impact on build to rent schemes

Planning policies shape BTR developments, guiding the mix and tenure of housing under the National Planning Policy Framework. Local plans might offer flexible terms for BTR schemes, like reduced affordable housing contributions for greater overall rental housing provision.

These policies ensure BTR developments maintain a set percentage of private market rent units, contributing to a stable rental housing supply. Planning decisions also emphasise quality communal spaces in BTR projects, for enhancing tenant experiences.

Affordable housing in BTR

Affordable housing in build to rent (BTR) developments provides below-market rent homes. It aims to assist individuals and families not served by the market.

These schemes, integrated into BTR projects, combine public housing goals with diverse rental options. A single entity usually manages these properties, focusing on long-term maintenance.

Regulations for affordable homes

Regulations for affordable private rent homes within BTR are guided by local authorities. These bodies dictate a set percentage of affordable units in new developments, with rents capped at a fixed percentage of local market rates.

Affordable units must match the quality of market rent properties in the development. Oversight by bodies like the International Valuations Standard Committee ensures fair rent settings and regulated increases, contributing to overall affordable housing provision.

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