Build-to-rent is more than just a buzzword and offers renters a viable alternative to traditional rental properties. More choice can only be good for renters looking for their next home. Here, we look at whether build-to-rent can be classed as affordable housing, along with other essential details about this new(ish) concept.
Is build-to-rent affordable housing?
Build-to-rent refers to a type of housing development in which the properties are built specifically for renting rather than sold to individual buyers. It’s promoted as ‘homes built for renters’, and its affordability varies depending on several factors, such as the location of a property and additional services offered in the building (more on that later).
However, build-to-rent is not the same as affordable housing, nor is it social housing. Build-to-rent schemes typically provide homes for market rent. In some cases, prices may be higher than other older rental properties in the same area. It’s good to consider the specific details of a build-to-rent development to determine its affordability.
But is build-to-rent generally affordable?
Build-to-rent differs from traditional rental properties owned by buy-to-let landlords. The homes are specifically for renters, and many buildings include additional services, such as on-site gyms, co-working areas and concierge services.
For this reason, many build-to-rent homes come at a premium and can cost more than traditional rental homes in the same area. When it comes to affordability, however, location also matters. Build-to-rent homes in sought-after postcodes achieve higher rental prices than similar properties in less desirable neighbourhoods.
What’s the difference between the build-to-rent and the private rental sector?
The primary difference between build-to-rent housing and the private rental sector is the ownership of the homes. In the private rental sector, individual landlords own and rent out their properties. In contrast, the properties are owned by a single entity (often a property development company). And rented out to tenants in build-to-rent developments.
Subsequently, build-to-rent housing is usually managed and maintained by a professional management company. Whereas the private rental sector is more decentralised, and properties are managed by individual landlords or property managers employed by the landlord. In the UK, build-to-rent housing is still a relatively new concept, while the private rental sector is more mature. However, build-to-rent is set to account for 8% of privately rented properties in the UK by 2032.
What makes build-to-rent unique?
A traditional rental home may be rented out by the landlord for a few years before being sold. Or, the landlord could choose to move into the property once the tenant’s tenancy is finished. Build-to-rent, however, is built solely for renters. The management company won’t ask for the property back because they want to sell it, and landlords won’t decide to move in once the tenancy agreement ends.
Build-to-rent housing is managed and maintained by a professional property management company. Which tends to provide a higher level of service and amenities to tenants compared to the private rental sector. Additionally, build-to-rent developments often include a range of community amenities. Amenities such as shared spaces and recreational facilities, which can make the rental experience more enjoyable for tenants.
It’s not uncommon for build-to-rent spaces to feature the following:
- On-site maintenance and repairs
- Concierge services
- Fitness centre and gym
- Residents’ lounge
- Games room
- Cinema room
- Outdoor space
- Co-working facilities
- Monthly events
- On-site parking
Some properties go one step further with in-house pet grooming. As well as the ability for tenants to decorate their homes as they see fit (within reason). Although, these additional features are often why some build-to-rent homes charge a premium for their units.
Is renting a build-to-rent property as satisfying as owning a home?
Owning your home in the UK is a long-held aspiration for many. The dynamic is changing, however. An increasing number of people are choosing to rent for lifestyle reasons. Deciding against committing to a large mortgage in order to follow their passions without being tied down to long-term mortgage commitments.
Buying a place to live in isn’t for everybody, even for those who can afford homeownership. Build-to-rent has struck a happy medium between homeownership and private renting. You can rent your home without the long-term commitment, but you have the security of knowing a landlord won’t ask for the property back after the tenancy agreement expires.
Many build-to-rent properties offer leases for as little as one day and as long as three years (which can be extended further). Renters find this appealing as it allows them to move around and embrace a lifestyle that fits their needs. So, in answer to the questions regarding build-to-rent being as satisfying as home ownership, it ultimately depends on the individual’s needs. It is, however, certainly a good alternative.
Build-to-rent isn’t part of any affordable housing schemes, and you can expect to pay market rent at many developments. What build-to-rent does do, though, is provide renters with more security, a strong sense of community and a professionalised setup which, in theory, makes renting a home a hassle-free process with plenty of benefits, from on-site maintenance to fun social spaces.
Last Updated: December 14th, 2022