First there was Right to Buy, then there was Buy to Let – and now the Build to Rent scheme is set to benefit the property industry.
Those three words are what the Government is hoping will help solve the housing shortage as developers take up the offer of support to build new homes to let on the private market.
But a West Midlands-based letting expert has warned current landlords that they need to smarten up their properties or be left behind.
The timely warning comes from Julia Williams, owner and director at award-winning property management specialists, Premier Places.
Mrs Williams has been advising landlords in recent weeks who are concerned about the impact the Government backed scheme could have on them – but has flagged her concerns that they risk being left out in the cold if tenants opt for new properties ahead of more traditional rental homes.
Build to Rent was launched by the Coalition Government in 2012 to increase the supply of private rented housing. Its aim is to reduce the upfront risk for developers by having the Government either share the finance or provide bridging loans to help schemes be constructed, with developers paying the money back once the homes are fully occupied.
Last year as much as £1 billion was made available and the Government is hoping it will create 10,000 new homes for private rent. It is expected that developers will build and operate blocks of apartments and housing estates for private tenants in the same way that many currently do for the student market.
Mrs Williams said: “Build to Rent is a win-win for the Government because it gets back all the money it loans and ensures there are homes available to rent.
“But current landlords have to recognise that there is a revolution coming. Many Build to Rent sites will not just be homes, they may include new extras such as on-site leisure facilities or concierge services.
“That means landlords are going to have to be able to compete not just on price but on service and quality as well. For many it is a different league in terms of competition.
“It also means ignoring the Build to Rent scheme in our larger towns and cities will see some landlords becoming small fish in a big pond as larger companies get in on the act and build whole housing complexes.
“Nobody is saying that current landlords should over-stretch themselves financially, but the tenants in the months and years ahead will be focussing on quality and value for money – especially when it comes to décor, furnishings, technology and attention to detail. It’s a situation many landlords, especially those with extensive portfolios, should be tackling now.”
Build to Rent is already established in London but commercial estate agents Knight Frank say there are £650m worth of development deals either on the market or under offer or exchanged in other cities.
– Private renting is the fastest growing tenure in the UK housing market but investment from major funders is behind other countries. Only one per cent of the UK’s private rented sector is owned by private organisations – mainly student flats. In the United States it is 13 per cent, while in the Netherlands it is as much as 37 per cent.
– Based in Worcestershire, Premier Places is an award-winning letting agency with over 15 years’ experience and one of the area’s largest managed property portfolios Visit our website through www.premierplaces.co.uk