Build to rent (BTR) is no longer an emerging sub-sector within the private rented sector (PRS)—it’s fully fledged and looks like it’s here to stay. In 2018, there were 142,999 BTR units either completed or planned across the UK: 32,223 completed, 36,410 under construction, and a further 74,366 with planning permission.
Designed specifically for renting rather than for sale, and usually managed by specialist operators and owned by institutional investors, it’s an asset class that’s now developing its own sub-sectors such as co-living, retirement living and intergenerational living.
For institutional investors, there’s been a marked shift of capital into residential and alternatives, underpinning BTR viability. The benefits are much talked-about: a less fragmented PRS market; improved quality, management and services for residents; faster build times compared to build to sell; regeneration/place-making, and potentially raising the overall standard of housing in the UK.
BTR’s capacity for solving the housing crisis is controversial however, and no one can pretend that it’s the whole solution. Return on investment dictates more expensive rents and the product can only address a proportion of the country’s housing needs. It will be interesting to see what can be learned from the BTR model and applied to affordable housing—should the political will to create affordable housing be revived.
Bringing it all together
The demand for housing has priced many people out the ownership market, especially millennials. For most, BTR is an affordability solution, though for some it’s a lifestyle choice. The model addresses the need for good quality urban accommodation, with location, convenience and digital smart living as givens.
Tenants are paying more and they therefore expect more, so amenity and service level provision are important differentiators. Style factors and branding are also pivotal—this is accommodation that’s expected to have its own distinctive identity, but developers have to balance this with longevity and durability as return on investment is a long-term strategy.
Getting the BTR investment proposition and product design exactly right isn’t easy and there is some way to go before policymaking and planning regulations fully support the model. The co-living variant, for instance, lacks a defined usage category, making the planning consent more onerous than necessary.
Influencing the design, mix and specification in such a way that the cost versus value proposition is fulfilled is of course the challenge. Our team has helped many clients establish project viability and optimum space configuration with robust benchmarking processes that typically consider the mix of unit types, number of units on floorplate, net to gross floor areas, programme duration comparisons and so on. Explore our benchmarking approach here.
Wembley Park—placemaking at the UK’s largest BTR site
BTR works best when integrated into communities. The Wembley Park masterplan approved by the London Borough of Brent in 2016, is an excellent example of the way in which BTR can form part of a placemaking initiative.
The masterplan marks the next phase of transformation of the land around the national stadium and incorporates the UK’s largest BTR site. Delivered in phases over the next six years, the new neighbourhood combines 5,000 BTR homes, iconic venues, retail and workspaces.
The redevelopment is providing £140m of investment into community infrastructure across Wembley and Brent, including a new primary school and nursery, a new GP surgery and community meeting spaces.
Achieving value at Wembley Park
We are working with Quintain to deliver two projects at Wembley Park, providing cost management services. These projects will provide 1,500 BTR apartments with a combined construction value of over £400m, due to complete in 2020. Shared amenity spaces include lounges, work spaces, gym and landscaped communal gardens with water features. Read more here, on the benefits we have brought to this scheme.
Supporting informed BTR decision-making
As one of the earliest delivery partners for BTR, SNC-Lavalin’s Faithful+Gould business has proactively managed the costs for a range of UK schemes, reinforced by our expertise in the wider residential and placemaking markets. We are well positioned to support clients in making informed decisions around planning, designing, funding, operating and maintaining assets, ultimately achieving best value.