For years, the UK property market has been betting big on an institutionally backed purpose-built and managed private rental sector, otherwise known as Build-to-Rent (BTR). Now, with 125,000 units either completed, under construction or with planning, there is a clear pathway towards critical mass in the nascent sector.
A study conducted by leading real estate services provider JLL has revealed that BTR is ultimately good for the market, consumers, planners and policy makers.
JLL analysed 7 BTR schemes with average scheme size units of 130 and the results were impressive. The analysis found that the 7 BTR schemes achieved an average rent premium of 9.3 per cent. The average rent premium achieved in London BTR schemes was 8.4 per cent while that for regional schemes was 12 per cent.
The average rental growth of the 7 BTR schemes for the last 12 months was 3 per cent with 4 schemes outperforming local market rental growth. Some schemes registered a high of 8.8 per cent average rental growth.
The tenants staying in the BTR schemes enjoyed diverse profile with their average age being 31 years. Their average annual income was £37,321 with 28 per cent of it spent on rent. It is evident that tenants opting for BTR schemes are above-average earners.
According to JLL, private renting will fundamentally alter in the UK over the next five years as more and more BTR developments are completed.
It has been a long journey, but Build to Rent (BTR) has finally arrived in the UK