SARAH TONKINSON
MANAGING DIRECTOR -
INSTITUTIONAL PRS AND BUILD TO RENT
"WHEN YOU INSTRUCT FOXTONS,
YOU DON'T JUST INSTRUCT ONE OFFICE
- YOU INSTRUCT OUR ENTIRE NETWORK."
SARAH TONKINSON
THE BUILD TO
RENT PIPELINE
IS STILL
DWARFED BY
THE NUMBER OF
BUILD FOR SALE
UNITS.
Private new homes
200k
250k
150k
100k
50k
0
Build to Rent units Build to Sell units
dataloft, Molior. Pipeline includes under
construction and planning permission
2010-2014 2015-2019 Pipeline
Build to Rent on the up
Build to Rent is only a small proportion of the
UK rental market but it is on a steep upward
trajectory. 21,000 units have been built since
2010, and there are now 14,000 units under
construction and another 28,000 with
unimplemented planning consent. Yet still
the number of units in the pipeline is dwarfed
by the number of units build for sale. At the
moment, planning policy is not designed to
encourage Build to Rent, but attitudes are
changing, and if the market tips in favour of
Build to Rent, that pipeline could expand
rapidly. An interesting aspect of the market
has been the volume of sales of new
developments being bulk bought by Build to
Rent investors.
A premium product
Build to Rent generally achieves a rental premium
above the local market. An assessment of
Build to Rent schemes shows an average
premium to the local market of 18% for
one-bed flats, and 29% for two-bed flats
although there will be variation by development
and/or area. Build to Rent schemes typically
operate in the upper price quartile, which limits
the potential pool of tenants and makes
moving of tenants across London even more
important. Just under a fifth (18%) of all our
active lettings applicants are currently looking
for properties which are at or above typical
Build to Rent prices, i.e. more than £400 for a
studio, £450 for a one-bed, £650 for two-bed,
£1,000 for a three-bed flat.
ABOUT
BUILD TO RENT
Sarah shares her thoughts on this
rapidly expanding sector.
We have been working with Build to Rent
investors and operators since 2016 when
the pioneers were testing the water. The
sector is maturing and Londoners are
slowly beginning to understand what it
means to have a professional operator
as a landlord. However there is still a
significant amount of work to do to
educate tenants on the benefits of
this sector.
Rental markets are highly responsive;
things happen fast. For a tenant, the
whole transaction, from search to signing
could be just one week from beginning to
end - very different from the protracted
process of buying and selling a home.
There's much less jeopardy for a tenant
- they can re-think their choices every
year if they want to - or even earlier if
things really don't work out, although
we wouldn't encourage that. There's
no furniture to move and very low
transaction costs, especially now with
Source: dataloft, Molior. Pipeline includes
under construction and planning permission
24 The London Report | Building London