You’re thinking about making an investment in the Build-to-Rent sector, but aren’t sure how you should proceed or if it’s a good fit for you? This guide on the reasons you should invest into Build to Rent will help you understand the benefits and risks of investing in this sector.
Build-to-rent developments are increasing across the UK due to the increased demand for high-quality specifically designed rental homes for young professionals and those over 50s. This growing sector holds tremendous potential for property owners and commercial landlords as long as you manage it right.
What exactly is Build to Rent?
Building to Rent, or (BTR) is the term used to describe the method that allows residential properties to be specifically designed to be used by the private rental market. The majority of the time BTR is performed by big property development companies as well as commercial landlords, investors and.
Build-to-rent developments typically comprise 50 or more homes each one of which is managed by a single landlord. These developments often come with desirable perks like in-house gyms as well as entertainment facilities, as well as sophisticated security systems.
The Trend of Building to Rent
The Build to Rent industry of the UK is growing. According to experts in property, Knight Frank, £50 billion will be poured into the sector by the year 2024 to take care of the rising demand in the private rental sector.
We’re all conscious that rental market is expanding. The rising cost of housing and the modern working patterns have created a greater number of tenants searching for long-term, suitable rental properties.
The end of the home ownership model has led to an older, more professional tenant group seeking a 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 company, such as a pensions or bank and is managed by a lettings agency.
Investors are eager to profit from reliable rental income and long-term growth. Certain Build rent Schemes are also funded by the government to aid in the construction process and to support infrastructure.
The key 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 the most straightforward is by way of one of the largest Private rental builders.
Benefits of Build to Rent Properties. Benefits of Build to Rent Properties
Based on Savills, Build to Rent investment reached £2.6 billion last year, indicating that it could be profitable to commercial property owners. There are plenty of exciting possibilities for landlords who invest on Build to Rent. Here are a few advantages
Tenancies that are longer are not uncommon (3 years or more)
High tenant demand
Rents that are higher (around 11% more than the average rental)
Rent income that is reliable and likely growth
The landlords have control over their investments
Investment rewards for long-term investments
There are numerous benefits for tenants, which make advertising and filling empty rental homes much more simple;
A wider range of homes to choose from
Buildings of high-quality and purpose-built construction with particular amenities like gyms , entertainment and fitness facilities
Access to convenience services like security, laundry , concierge and more
Modern, sustainable buildings
The bill is 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 to mitigate them.
Construction Risks
Construction is a risky venture and everything may go wrong, and take more time than anticipated which can result in higher expenses.
Planning Permission Questions
It is a relatively new phenomenon Planning permission to build-to-rent could take longer, which can result in increased costs and lower rental income.
No-Position Periods
As a landlord, you might be delayed in receiving rent in full as the building is filled up. To avoid lengthy void periods you can set up a tenant sign-up system when the building is being constructed. Alternately, you can design the building in phases to ensure that rental income is generated all through the process.
Drawbacks for Tenants
It’s also important to take into consideration the drawbacks for tenants in the context of Building to Rent, since it will allow you to determine the ideal tenant to target and reduce any risk.
There are some disadvantages to tenants, for example;
The majority of Build to Rent developments target younger or elderly tenants and are not likely to appeal to families or low-income renters.
This kind of property may be more costly for tenants.