x
By using this website, you agree to our use of cookies to enhance your experience.
STAY CONNECTED!
    
newsletter-button

TODAY'S OTHER NEWS

Build to Rent set to grow as individual BTL landlords exit the market

The Build to Rent development pipeline has grown dramatically in recent years and there are clear signs of the sector becoming a mainstream asset class that could fill a major gap left by the recent surge in the number of landlords exiting the market due to greater pressure from tax and legislative changes, according to Apropos by DJ Alexander. 

The property management firm believes that the surge in operational Build to Rent stock over the past 12 months, along with the amount under construction, means that the sector is now well placed to provide one of the solutions to the declining number of landlords in the PRS.  

The latest figures from CBRE show that there has been a 20% increase year-on-year in the amount invested in institutional investment into the UK’s Build to Rent for the first half of 2019. 

Despite the increase, Built to Rent currently comprises less than 1% of the total value of the UK’s private rented housing stock. However, with landlords being financially squeezed at every stage from buying, renting to selling in the PRS market there is an opportunity for large scale investors to replace this market.

The British Property Federation report that there are 142,999 Built to Rent units either completed or planned in the UK, comprising 32,223 completed, 36,410 under construction, and 74,366 with planning permission.

David Alexander, joint managing director of Apropos by DJ Alexander Ltd, commented: “Although it is still early days for the Built to Rent market it is clear that it is attractive to major institutional investors such as Legal and General, Aberdeen Standard, Goldman Sachs and others. These companies see the investment benefit while the government understands the need to quickly deliver large numbers of rental properties over a short time frame to meet the current and future demand caused both by landlords exiting and the growing UK population.”

“Even ambitious social housing targets of 100,000 new homes a year will not meet the growing demand within the rental market and Build to Rent is providing a very effective, quick and targeted response which is able to produce quality homes, at affordable prices in key areas.”

Alexander added: “Built to Rent, retirement living developments and purpose-built student accommodation (PBSA) are the three areas which are currently driving the private rented sector. The PRS has traditionally utilised properties which were built to be sold. Adapting such properties to a long-term rental market can work but not all developments are as sympathetic as they could be.”

“The advantage with Built to Rent is that you can create homes which are ideal for long term renters and create homes which are designed and developed with one aim in mind: to develop properties directly suited to a specific market. This creates more appropriate, bespoke homes able to fulfil the long-term needs of renters.”

He continued “The PRS has grown significantly over the last 20 years and the market has often been too slow to respond to changing demands. It has also often reacted in an ad hoc way to the challenges presented by the market which has not always been as appropriate as it could be for the increasing numbers of individuals choosing to live in rented accommodation for longer periods. 

“Built to Rent offers one solution to this complex situation and I welcome its adoption both within national and local governments and among institutional investors in providing a welcome and timely response to a growing demand from diverse communities across the UK.”

  • icon

    Here’s your number 1 reason why we are getting kicked from all angles the Tory doning rich getting unfair advantage over the private individual landlord. They only want companies running the PRS that’s why they left LTD companies alone as they knew professional portfolio landlords like myself could incorporate and many others were already in LTD structure.

    icon

    Total agreement with you. Something I loath about this country is when people find a path to invest in the corporations with plenty of government backing come along to kick the little guy out and take it all.
    The strange thing I find is how many politically connected people end up with high salary directorships of these companies.

     
  • icon

    The world is corrupt and joe public is onto it hence why politics is is such a mess. It was easy to blag people before internet etc now they can’t what they have done to us and continue to do is criminal

  • icon

    There is nothing surprising about this article, that’s what the Regulations are designed to do, drive us out to make room for them to take over.
    Also we have disgraceful Monkey Consultation with 50 sets of questions, all designed to make sure you give wrong answers because the questions are wrong and that’s if most LL’s are capable of completing such nonsense, prepare for worst Recession yet.

  • Mark Wilson

    Buy to let landlords are getting kicked because government doesn't want mom and pop landlords. They are too hard to control and administer, and if that isn't enough Generation Rent are too vocal and control the agenda. I never understand why Landlords take such umbridge. They have had it too good for too long, and all markets have their day.

    icon

    It isn't all over for the small landlord yet not by a long way.

     
    icon

    I agree Andrew just gotta be one step ahead and demand had never been higher

     
    icon

    Mark Wilson
    "They have had it too good for too long"
    What are you implying, that we make a terrific profit out of letting properties?
    I don't know where you are in the country, but I doubt if what you say applies in my area in South Wales.
    Housing associations et al in our area , get away with murder and are largely unregulated compared with the PRS.
    Damp properties are common with these organisations, unlike mine that are rented at very reasonable rates and well maintained.

     
  • Paul Barrett

    These idiot institutional investors clearly haven't read what the Labour Party proposes.
    If they had the last thing they would be investing in is BTR property.
    Basically every 5 years they are gambling there won't be an idiot Marxist Labour Govt.
    No way would I invest anything with such BTR operators.
    There is a risk every 5 years of rent controls and property expropriation via RTB.
    No sane LL would risk every 5 years of their investment assets being stolen.
    Such a threat means only LL prepared to gamble Labour not winning a GE for the next 30 years will remain invested.
    I don't like the odds so for me the AST lettings market is a busted flush.
    Lodgers are the only way to achieve the same income level while not being subject to all the recent bonkers Tory penal policies and the ridiculous Labour proposals.
    To remain an AST LL you need strong nerves!
    Mine are frazzled.
    I am at a time of life that I cannot risk a Labour Govt so I am having to sell up.
    Based on what the circumstances are now there is no way I would invest in BTL
    I'd love to know how the idiot BTR operators are going to explain how their investment has been expropriated by Labour and that rents will now be reduced!!
    Will surely affect dividend returns!?

  • icon

    I currently live in a Build to Rent scheme in the UK, and have also lived in such schemes in Germany, where they are far more common.

    As a tenant, I _far_ prefer it, as you have a professional operator as your landlord, not someone for whom it is simply an investment vehicle.

    I do wonder sometimes to what extent the people commenting here are thinking of the whole society benefits of these schemes vs just their personal bottom line.

    icon

    I welcome all competition but not when smaller landlords like myself are not allowed to compete on an even footing. Have you heard of s24 ? It’s only fair that all sectors of an industry play by the same rules that’s the only issue I have with build to rent as I would imagine they are lovely places to live if you like urban living.

     
    icon

    Kenneth.

    I think your logic is back to front. Investors in btr properties are only interested in them as investment vehicles (probably among many other investments) whereas small private landlords are keen to keep good tenants happy and their properties in good repair as each represents a significant proportion of their income and net worth.

     
    icon

    The last non-BTR rental property I lived in was owned by an investor 10 000 km away from the UK (via a company domiciled in the Channel Islands). He had no idea what state of repair his property was in, and he certainly didn’t do much to keep me happy.

    Of course large institutional investors want to make money too - the difference is that they put a layer of professional management in, which is only feasible at the scale of these large schemes. As a tenant, if there’s an issue in my apartment, I just pop down to reception and they’ll come and have a look straight away, and then have someone come and fix the issue the same day or in a couple of days. Private landlords with one or two units simply can’t compete with that service level.

     
    icon

    Not all landlords live miles away from their properties, yesterday I had a call from a tenant reporting a fault with a heater, I was round there to fix the problem in less than 1 hour, generally if I'm not round the same day I'm round the next day, don't tar all landlords with the same brush that simply isn't fair .

     
    icon

    Kenneth MacArthur
    I more than compete with that service level you suggest that private landlords can't deliver.
    I think that you will find that nearly all landlords on here are very professional.
    Anyway, I am fed up of being constantly criticised and berated, so I intend to leave the sector altogether so you may have your wish come true.

     
  • icon

    Don’t agree smaller LL deal with issues much quicker & better than large Companies who have so much officialdom & procedures in place, then send some sub-Contractor that don’t care just do minimum & dispatch his Invoice.

    icon

    Exactly right.
    I have had calls from tenants over Christmas and sorted it out within hours.
    They wouldn't be able to compete with that level of service.
    If I am contacted, I am generally able to sort something out that day and if I can't I keep my tenants informed of what is being done.
    Don't tell me that these large corporations can better that?

     
  • Paul Barrett

    Nothing wrong with corporates PROVIDING it is a level playing field in business.
    For that to occur S24 has to be abolished.

    So NO chance then of a Level Playing Field anytime soon!!

    icon

    Also Paul, they should be subject to the same standards to which we have to adhere.
    If I rented my property and failed to address such matters as damp problems which Housing Associations appear to do on a regular basis, I would be reported to Rent Smart Wales and instructed to sort it out forthwith, but these organisations are not accountable to the same extent as landlords in the PRS.

     
  • Paul Barrett

    I was thinking more about private corporate providers.
    I don't include social housing providers as they are always allowed to get away with murder when as you intimate if we did the same as them we would be crucified.
    So because of that paradigm I don't even consider them.
    My competition is the BTR operator who is allowed to offset the finance costs against income to produce a taxable profit.
    I see NOTHING wrong in that as the BTR operators have GAAP applied to their business like any other business in the UK.
    Of course the only business in the UK not allowed to offset the costs of finance for their business is the mortgaged sole trader LL!!
    I see no reason why size should matter.
    Business taxes should operate the same way for those engaged in that business.
    That surely is a fair level playing field!?
    Perhaps I am being a little politically naive as S24 is clearly a political tax
    Is that fair!?
    Personally I think NOT.
    Yet it seems in society at large nobody has any problems with mortgaged sole traders being persecuted and discriminated against.

    S24 is a bonkers penal tax policy.
    But surely if it is to remain in force for proper fairness it should apply to all the finance costs etc for all of those operating as LL!!

    Of course we all know that us mortgaged sole trader LL are on a hiding to nothing.
    So our response is to sell up.
    That is what I am doing.
    Call it a tactical retreat.
    I intend to exit with at least some resources and escape a possible Corbyn Govt.
    An EA I was chatting to in B Stortford yesterday stated last year he sold 3 LL properties.
    This year he has sold 23!!!
    BrExit concerns seem to have been the main reasons for them selling which surprised me as I would have thought S24 was a major reason.

    But anyway it seems the LL rot has set in.
    What have been perfectly viable businesses are now being made unviable by bonkers taxes etc like S24.
    I'm afraid the PTB have no concern at all that mortgaged sole trader LL are being discriminated against.
    Once they have achieved their objectives of eradicating mortgaged sole trader LL they will come for the small corporate LL.
    The big corporates will obviously be left alone as they contribute to Tory Party coffers.
    I accept my fate as I know there is nothing I can do about it.
    I contributed to the S24 JR.
    That went well!!!!???
    It is naturally disappointing that I am being unfairly taxed out of business after all my efforts and substantial losses these past 10 years.
    But we are where we are and so like many LL regretfully I am having to sell up.
    This is a shame for the good tenants I will be making homeless as I will only sell with vacant possession to achieve the best market price.
    I will go off into the sunset taking my previously hard working capital and deposit it with savings accounts where it will remain largely socially useless and losing value daily.
    Far better that than risk expropriation of that capital by an evil Labour Govt.
    All in all a very sorry state of affairs.😢

    icon

    Why can’t you operate your business through a corporate form rather than as a private individual, the same as the big operators do?

     
    icon

    Ken I have restructured into corporate without refinancing its working well. It’s not just s24 there are many reasons why a landlord would want to sell up it’s really tough out there and we have zero friends we are treated worse than isis

     
    icon

    4 03 am, do you ever sleep Paul ?

     
  • Paul Barrett

    @ Mr macCarther
    The reason is because it would mean having to pay SDLT etc on properties I own.
    So clearly I am not going to do that.
    I don't have the odd £100000 down the back of the sofa!!!
    Far better to sell up and at least have something.
    I really don't need to be a LL it was only ever a want rather than a need.
    A FHL is looking like an attractive option.

  • Paul Barrett

    @ a townshend

    Yep all part of being a self-managing LL.

    Am currently dealing with a recently vacated flat and am clearing things out.
    Oh! by the way the tenant owes me over £7000 who is supposed to be meeting up with me to pay everything.
    But of course that means for the past two months I have paid the mortgage.
    Ah! Yes not forgetting dealing with lodgers who owe me currently over £4000.
    So lots to do etc
    Don't travel during busy hours by the time I got myself sorted having loaded up the car with stuff to remove from the now vacated flat. I returned home in about 50 mins there being not much traffic about.
    I then had dinner........Thai out of a box..........whereupon I posted the comment.
    Obviously the next day I didn't surface until about 1400hrs.
    So there we are just another day in the life of a self-managing LL.
    It does seem I continually suffer from rent defaulting tenants none of whom qualify for RGI.
    So I am starting a progressive sell off as it is just too much hassle with everything.
    Perhaps then I won't be up at 0403hrs in future!!!??

icon

Please login to comment

Zero Deposit Zero Deposit Zero Deposit
sign up