The private rental sector goes professional

 

With proportions of owner-occupier rates in the UK dropping from 71% in 2003 to 63% this year, the private rental sector has got some exciting times ahead of it.

Set on a small estate in Manchester’s Salford area, the red-brick homes are dubbed as build-to-rent and sit right next to their brothers and sisters that will be sold to first-time buyers, as the Financial Times reported.

The Salford homes however were never intended to be sold. Investor who put their money in the development are planning on keeping them for the long term. They harvest the rent from the homes and re-invent renting in the UK in the process.

Across all of England’s North, hundreds of family homes like these are under construction by companies such as Sigma Capital.

Most of them see the demand in those homes in the increasing difficulties families and young professionals are facing when they’re seeking to buy a new home.

This trend has the potential to change the British rental market for forever, if it continues at its current pace.

Historically, only councils and social landlords built rental homes for people on low incomes. Those who couldn’t make it into social housing had to lean on a gang of amateur landlords who either rented out their own former home or accumulated smaller portfolios of properties.

Private investors now want to professionalise the business, with rents covering all the bills and some extra maintenance.

Countryside Properties, a listed housebuilder, has already built more than 600 rental homes with another 550 expected to follow in 2017. The builder targets cities in the Northern Powerhouse where the local authorities are keen to have more housing built in their own large land banks.

Most of the rental homes are family houses and share the same neighbourhood with houses built for sale.

A three-bedroom home can be rented for £700-£890 monthly, while a four-bed is about £1,100 including all bills and insurance. Buying the same home will set you back £210,000-£225,000.

Over the last 13 years, as homes became less affordable and mortgages harder to access, the proportion of owner-occupiers dropped from 71% to 63%.

Critics, however, argue that renters will end up poorer in the long run. Housing charity, Shelter, said young adults are paying dead money to landlords. On average, house prices have increased by 7% since 1980, as figures by the ONS revealed. Renters have missed out on the capital gain that comes with it.

Graeme Hogg, chief operating officer, said Sigma was also helping councils cut housing waiting lists. “Oldham has 11,000 people on the list. Only 3,300 of those qualify for public housing. Local authorities have a real problem with amateur landlords buying homes as an investment and then not maintaining them.”

Investors realised the potential of build-to-rent development in the UK a while ago as a source of steady income on a large scale, similar to the very successful sectors in Germany and the US.

During the first half of 2016, the sector has gained some momentum: the number of properties completed, under construction or with planning permission has gone up from 21,400 to 57,000, the British Property Federation revealed in their latest figures.

About 5m households are already renting privately and an additional 1.2m is expected to join them in the near future according to Savills.

Investors, including sovereign wealth funds, pension funds and insurance companies, have already poured a total of £15bn into the sector and are forecast to give another £35bn on top of that by 2020, according to research by Knight Frank.

In Manchester alone, 28 build-to-rent developments are currently being planned, the BPF revealed.

Highgrove Mews

High Net Yield Freehold Houses

  • Commutable to London (27 mins to central Paddington station)
  • Rental demand extremely strong with large industry presence in Reading
  • Freehold with 4% net yield

£284,955 - £457,000

St Petersgate – Stockport Manchester

New Launch - Stockport Manchester, apartments from £160,000

  • Discounted launch prices from £160,000
  • Excellent transport links with 3 trains per hour to London Euston and only 9 mins journey to Manchester Piccadilly
  • Experienced development team

Assured Rent Housing Association Leases

Assured Rent Housing Association Leases

  • Assured rent & no rental voids
  • Tenant damage cover & newly refurbished inline with requirements of a corporate sitting tenant
  • Free property and lettings management

From £62,000

Emerging Birmingham Commuter Town With Properties From Just £104,000

The emerging Birmingham commuter town where properties are selling in an average of just 24 days

  • A collection of 62 two bedroom apartments and 28 one bedroom apartments.
  • DE14 is one of the fastest selling postcodes in the West Midlands.
  • 23 minute train journey into Birmingham New Street Station.

Properties from £104,000

Mill, Stockport

The Northwest's emerging property hotspot

  • Discounted off-plan 2-bed prices from £162,000
  • Completion date - Q4 2021
  • Rental yields - 6% plus

Discounted off-plan 2-bed prices from £162,000

South Central – Birmingham City Centre Apartments

Highly anticipated 28 storey launch in Birmingham City Centre with an impressive roof garden and communal facilities.

  • 154 units across 28 storeys
  • Residential multi-media community room, gym, roof garden and sky cinema
  • Excellent future connectivity via the metro system to other key transport hubs and locations around the city

from £205,800

ba-

Talk to us

Speak to our UK property experts today: 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

+852 9865 4446

Open from 9am-6pm HKT

Stamp Duty Calculator

.

Unlock members only investment opportunities and full development details. Join now – it’s free, quick and easy.

Login

Not a member? Sign up for free

The private rental sector goes professional

The private rental sector goes professional

Example

By submitting your details via this online form you agree to be contacted via email/phone/SMS by Direct Marketplace Ltd t/a BuyAssociation in relation to property investment and property developments . We do not share your personal details with third parties.  To view our full Privacy Policy click here.