Contrary to popular belief, the UK housing crisis is not a new phenomenon. It is a crisis the UK has been grappling with for decades. Dating as far back as the 1980s, when council houses were sold in their millions. Public bodies – partly through policy and partly due to lack of funding – all but abandoned large scale housing construction projects. Such projects have gained popularity in recent years, due to the compounding and overwhelming effects of this crisis over time.
The root cause of the housing crisis, simply put, is that there are no new houses being built. However, this is subject to various factors. Such as, the cost of owning & building a home, property investors holding on to land till it reaches a peak price, etc. To alleviate this crisis before it gets too far out of control, governmental policies are being designed. Ensuring housing affordability and an increase in the supply of housing.
This is where the BTR housing scheme comes in as a solution to the existing situation confronting the UK. But in what way, and how efficiently can Build to Rent ease the strain of the UK housing crisis? To reassure the reader, here are the ways BTR aims to solve these problems:
Ways the Build to Rent Sector can Solve the UK Housing Crisis
Design
Build to Rent developments are designed in such a way that they appeal to all kinds of renters. From the family, to the working class, to student renters and so on. The apartments within a development come in a mix of small, medium, and large sizes. As well as different shapes & layouts to suit different needs and budgets, thereby appealing to a wider market.
This is unlike most buy-to-let apartments that offer only a replica of the same layouts in their buildings. BTR developments are designed specially to meet tenants’ housing needs. By including amenity spaces (gyms, restaurants, event spaces, etc.), concierge services, on-site security, on-site maintenance, etc.
Focusing on tenant-oriented services, BTR developers encourage people to embrace a tenancy that offers more than just a shelter. This guarantees people their money’s worth and balances the scales when considering renting against buying.
Disrupting the Buy to Let Market
In it’s short period of existence, the BTR market has come to destabilise the traditional buy-to-let market. Mainly, by taking advantage of the shortcomings that riddle the housing rental sector. The BTR concept has revamped the market by catering for the needs of the tenants, in ways buy-to-let landlords could not.
The popular shift to BTR is evident as the buy-to-let market has declined 1% every year in the past five years. Furthermore, it is expected to see more reductions under the lockdown measures. This decline can be traced to the same period the Build to Rent developments emerged in the UK.
This disruption is welcomed by the government, as the buy-to-let market is tough to regulate. There are millions of private landlords all over the UK. Additionally, there was 100,000+ complaints filed against buy-to-let landlords in England and Wales between 2017/18.
In contrast the BTR sector enjoys the government’s full support. As a result of it being regulated with ease due to being run by corporate property investors. Making this sector, the government’s preferred solution to the UK housing crisis.
Tenancy Length
The provision of long-term tenancy is one of the top appeals of the Build to Rent sector. As, it offers safety and security to tenants by offering tenancies of up to three years.
Long-term tenancies give tenants a chance to have a sense of ownership – a place they can call home. They can personalise to their taste. And, without the fear of abrupt changes in housing. Something renters are accustomed to with buy-to-let landlords.
In a survey by BBC News the average length of a tenant’s residence in the UK has increased to 4.3 years. Thus, being able to provide long-term tenancies provides a feasible alternative to buying. Further, it significantly checks the housing crisis in the UK.
Location Expansion
The growth of the Build to Rent sector in recent years has accelerated rapidly, with more developments being constructed. According to the most recent BTR market research (Jan 2019), by Savills and commissioned by the British Property Federation: The total number of units completed, under construction, or in the longer-term pipeline in the UK stood at 139,508 in the fourth quarter of 2018, and up by 22% from the same quarter prior.
London contains the highest number of BTR developments in the UK. But, there’s rapid expansion elsewhere with other cities having a combined higher amount of developments completed and under construction.
According to Real Asset Insight, the following cities, apart from London, have the highest demand and drivers for Build to Rent in the next decade: Manchester, Salford, Birmingham, Leeds, Cardiff, Newcastle, and Glasgow.
Conclusion
Build to Rent will not solve the whole housing crisis but it will offer tenants more options and quality. In turn, leading to the disruption of a business that is so often associated with inflated house prices, poor housing quality and customer service within an area.
BTR seeks to vastly improve the concept of tenancy away from the profit-oriented landlords providing bare minimum services. Build to Rent raises the bar of tenancy standards higher through the provision of quality services and the prioritising of tenants’ interests.
If you’re looking for a more comprehensive understanding on all areas of the UK Build to Rent market, check out our BTR Guides. Here, you will find our complete guide which covers in depth, all of the topics on this website in far more detail. It is available for purchase as a whole, or individual sections if you prefer to focus on one area.
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