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You can find the current article at its original source at https://www.theguardian.com/housing-network/2018/apr/11/build-to-rent-developers-profiting-generation-rent
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| Version 1 | Version 2 |
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| Build-to-rent: how developers are profiting from Generation Rent | Build-to-rent: how developers are profiting from Generation Rent |
| (14 days later) | |
| The number of UK residents renting privately has doubled over the past decade, with some 20% of households (30% in London) now in private rented accommodation. Into this growing gap between social housing and home ownership the build-to-rent model has given property developers a new way to profit from Generation Rent. | The number of UK residents renting privately has doubled over the past decade, with some 20% of households (30% in London) now in private rented accommodation. Into this growing gap between social housing and home ownership the build-to-rent model has given property developers a new way to profit from Generation Rent. |
| In 2017, the burgeoning build-to-rent market, comprising purpose-built blocks of rental homes, attracted £2.4bn in investment and is forecast to grow by a further 180% over the next six years. | In 2017, the burgeoning build-to-rent market, comprising purpose-built blocks of rental homes, attracted £2.4bn in investment and is forecast to grow by a further 180% over the next six years. |
| The attraction for large pension and insurance funds, such as Legal & General, is clear. They have the capital to develop large blocks of flats, which are let out and managed long term by a single company rather than being sold to individual landlords. This provides institutional investors with a fairly stable, long-term income stream. | The attraction for large pension and insurance funds, such as Legal & General, is clear. They have the capital to develop large blocks of flats, which are let out and managed long term by a single company rather than being sold to individual landlords. This provides institutional investors with a fairly stable, long-term income stream. |
| Developers are skimping on low-cost housing. Time to get tough | John Perry | |
| And for tenants, there’s a promise of a more streamlined experience, with bespoke, high-quality management rather than an unreliable, individual private landlord. | And for tenants, there’s a promise of a more streamlined experience, with bespoke, high-quality management rather than an unreliable, individual private landlord. |
| Build-to-rent company Fizzy Living, for example, boasts of providing a five-star service and promises to complement the “hectic lifestyles of work-hard, play-hard professionals”. Tenants are typically offered longer tenancies than for standard rental accommodation, with contracts of up to three years or more, and other amenities, such as gyms, communal lounges and cinema rooms. | Build-to-rent company Fizzy Living, for example, boasts of providing a five-star service and promises to complement the “hectic lifestyles of work-hard, play-hard professionals”. Tenants are typically offered longer tenancies than for standard rental accommodation, with contracts of up to three years or more, and other amenities, such as gyms, communal lounges and cinema rooms. |
| Because build-to-rent has the potential to increase the supply of homes and improve conditions for renters, many in the property world, such as investment firm Venn Partners and consultancy Lichfields, have touted it as a way to solve the UK housing crisis. It has also received considerable government support, including a £1bn build-to-rent fund. | Because build-to-rent has the potential to increase the supply of homes and improve conditions for renters, many in the property world, such as investment firm Venn Partners and consultancy Lichfields, have touted it as a way to solve the UK housing crisis. It has also received considerable government support, including a £1bn build-to-rent fund. |
| But the benefits of build-to-rent come at a premium. One study found that London’s new private rental “communities” were, on average, 11% more expensive than rental properties nearby. In the Get Living development at Elephant and Castle in south London, renting a one-bedroom flat costs £1,841 a month. As the company requires a household income of 30 times the rent, you’d need to earn almost £60,000 a year to qualify as a tenant. As the government latches on to the promise of build-to-rent in accelerating housing supply, it seems likely that these schemes will be subject to less stringent requirements to provide affordable housing. | But the benefits of build-to-rent come at a premium. One study found that London’s new private rental “communities” were, on average, 11% more expensive than rental properties nearby. In the Get Living development at Elephant and Castle in south London, renting a one-bedroom flat costs £1,841 a month. As the company requires a household income of 30 times the rent, you’d need to earn almost £60,000 a year to qualify as a tenant. As the government latches on to the promise of build-to-rent in accelerating housing supply, it seems likely that these schemes will be subject to less stringent requirements to provide affordable housing. |
| Build-to-rent – the solution to Britain's housing crisis? | |
| So, despite suggestions that build-to-rent will empower Generation Rent, these high-spec products only really seem to be an answer for affluent young professionals. | So, despite suggestions that build-to-rent will empower Generation Rent, these high-spec products only really seem to be an answer for affluent young professionals. |
| Meanwhile, a Shelter report in January found that half of families in UK social housing are being ignored or refused help when they report poor or unsafe conditions. Driven by the market for the market, build-to-rent is just another so-called solution that continues to allocate housing on the basis of wealth rather than social need. | Meanwhile, a Shelter report in January found that half of families in UK social housing are being ignored or refused help when they report poor or unsafe conditions. Driven by the market for the market, build-to-rent is just another so-called solution that continues to allocate housing on the basis of wealth rather than social need. |
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