The build to rent sector is booming, with new developments appearing at a rapid rate and the reputation of the sector growing. The developments and rental packages are popular with renters, who appreciate the tailored offering build to rent provides. The narrative is that build to rent is more expensive than traditional rental, but is this really the case? Let’s take a look at the evidence to find out whether build to rent is affordable.
What is build to rent?
If you haven’t come across the build to rent phenomenon before now, you may be wondering what it is. In short, Build to Rent developments are designed and built solely for renting, rather than for sales.
Most traditional private rental housing was built to be sold, with landlords acquiring the properties and letting them to tenants. Build to Rent, on the other hand, is completely tailored to the needs and lifestyles of tenants.
The buildings tend to have on-site management teams, communal spaces for residents and even gyms and health clubs. Extras can include free Wi-Fi and utility bills included. Rental agreements are flexible, with the sector catering to the short-term letting market as well as longer-term tenants. Some developments offer terms of up to five years.
Build to rent value – resident insights
HomeViews’ own 2022 Build to Rent Report gives insights into the value of choosing build to rent over other types of rental. The value for money scores provided by verified residents of build to rent developments have historically tended to be the lowest scores of the five categories reviewers provide feedback on for HomeViews.
Residents most frequently cited poor facilities or management, or a disconnect between what was promised and what was delivered, as justification for a poor value rating.
However, in 2022 value received the most significant increase in average score across the HomeViews review categories, with the increased value rating driven largely by high-scoring new developments outside London. The reviews suggest build to rent represents better value outside the capital than in London.
The top three developments according to their value rating were Duet MediaCityUK, The Quarters Croydon and Aston Place in Manchester, London and Birmingham respectively.
Build to rent vs. the traditional rental sector
The reputation of build to rent is that it’s expensive, and tends to cater to higher earners with large amounts of disposable income. However, the study ‘Who lives in Build-to-Rent?’ from the British Property Federation (BPF), Dataloft, London First and the UK Apartment Association (UKAA) shows the differences aren’t as pronounced as you might think. Around a third of build to rent residents earn between £19,000 and £32,000 per year. This compares to 37% of the private rental sector. The age profile of traditional renters and build to rent tenants is broadly similar, and the same proportion of residents work in public sector jobs (18%).
The research indicates that build to rent tenants tend to spend an average of 30% of their income on rent. By comparison, private rental tenants as a whole spend an average of 33% of their income on rent. Build to rent is already starting to look like a comparable choice to the private rental sector, before even considering the value of the additional benefits on offer.
Build to rent benefits
Rental only properties tend to come with a variety of add-ons and benefits, that the traditional private rental sector doesn’t provide. Perks can include inclusive utility bills, Wi-Fi, cleaning services and membership to health clubs and gyms.
On-site management teams are available to fix any problems that occur, while some also provide 24-hour concierge services. All of these add-ons provide added value for build to rent tenants that either aren’t available to the traditional rental tenant, or come at significant additional cost.
The BPF’s research shows that around three quarters of build to rent offer shared gardens or terraces and concierge services (78% and 73% respectively). Six in 10 developments have co-working or meeting spaces and residents lounges. Around half have a gym and 24-hour security staff. These additional facilities and services add significant extra value to build to rent tenancies.
Cost of rent or cost of living?
When considering the overall cost of build to rent, it’s worth thinking beyond simply the monthly rent outlay, and towards the cost of living. The sentiment that build to rent is more expensive than the private rental sector is already looking fragile.
When you consider that the average cost of utilities (gas and electricity) in the UK is £100 a month, or around 5% of the average income, it starts to become even more dubious.
Build to rent tenancies often come without the need for a deposit. This can be a costly outlay for private renters. Half of build to rent developments offering gym or health club membership in their rent. This is another monthly expense that you don’t need to budget for elsewhere.
Build to rent developments tend to include more of the monthly cost of living expenses in them than the private rental sector, which may occasionally include utilities, but lack most of the other perks of build to rent. So, is build to rent affordable? With all these things considered, it may be a more affordable choice than many assume.
HomeViews provides verified resident reviews of the UK’s housing developments. We’re working with developers, house builders, operators, housing associations and the Government to recognise high performers and help improve standards in the built environment.
