Often abbreviated to B2R, Built to Rent is an emerging sub-market in the private rented residential market. Typically, build to rent properties are entire developments of homes, often owned by a bank or another financial organisation. The institution will then usually use an estate agent with a lettings department to put the properties on the market and rent them out to people.
Build to rent is different from buy to let. With buy to let a landlord will have one or a few properties that they may manage themselves. With build to rent, a singular landlord is replaced with an institution.
Living in a build to rent development
B2R properties are common in parts of Europe and North America and are a direct response to the demand for housing. Development companies are securing residential development finance to create build to rent complexes to fill the large gap in the market.
Unlike new build housing developments, build to rent properties are built to suit renters specifically. There is a large focus on community, with shared spaces and gardens installed to encourage residents to mingle. Often, they contain a number of amenities such as concierge services, gyms, small grocery stores and cafes. Many people compare build to rent developments to hotel complexes.
Unlike the dingy purpose-built rental homes of the past, investors and developers are paying high attention to quality with build to rent properties. Properties are fitted with superior fixtures and fittings, with underfloor heating and trendy furniture being the norm.
Build to rent and affordable housing
A key benefit of build to rent developments is the provision of affordable private rent homes. This class of property is specifically designed for B2R developments, allowing people who have financial limitations to secure a home. The government dictates that “20% is generally a suitable benchmark for the level of affordable private rent homes to be provided.” Local authorities are welcome to change this percentage but must provide evidence via a local housing assessment to back their motion.
Affordable properties should have a minimum rental discount for tenants of 20%. This means that a property with a rental value of £1,000 pcm would be offered via the affordable housing scheme for a maximum of £800 pcm. However, local authorities can scale this percentage up, 20% is the minimum.
Affordable private rent is decided upon by developers and the local authority. If both parties agree other forms of affordable housing can be introduced to provide access for even more people, such as council or housing association inclusion or shared ownership.
Benefits of build to rent housing
Financial aspects aside, B2R homes provide tenants with a secure long-term rental home. Build to rent properties are built for the sole purpose of letting so investors and institutions are in it for the long run to reap the benefits. Furthermore, because there is no traditional single landlord, properties are managed by professional teams which means issues and maintenance queries are corrected in a timely fashion and tenants won’t be left in the dark or waiting.