There is a lot of talk about Build-To-Rent in the UK and many are expecting its growing presence in the private rental sector to triple in value within the next four years. By 2020, Knight Frank are predicting that Build-to-Rent will reach up to £50 billion in the next few years, according to their recent research on the major investors who have their eyes on the potential of the rental market.

Investors want to keep their properties fully-occupied with tenants. By offering longer tenancies, good onsite amenities and transport links to satisfy the needs of private renters, the concept of Build-to-Rent does look promising. It is much more difficult to manage individual properties within blocks of flats in private ownership. The advantage of Build-to-Rent is that everything is combined. With only one manager for the whole building, day to day functioning is significantly smoother.

As the demand for rented homes increase (that is a whopping 250,000 homes a year), the government promotes new, built for purpose units. The idea is to allow developers to build properties for rent with the government sharing some of the risk. In 2012, the government revealed their intention to build new homes to help encourage local economic growth and established a Build-to-Rent fund of £200m of investment. A year later, the Chancellor of the Exchequer showed no going back and the fund increased to £1billion. Most of the rental sector is dominated by part-time landlords with a single or few properties. Build-to-Rent on the other hand, funded by pension funds and insurance companies will transform the nature of rental market. In 4 years time the current 2% worth of the private rental sector will reach 5%. Expect to see brand new building projects popping up across the nation for the purpose of renting.

Published on 01 January 2016

Source Wonderlease

Written by Marc Cohen

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