How London Build-to-Rent Development Affect BTL Landlords and Rents

By | 13 November, 2017

With the new Conservative administration came a new view towards housing. The shift from home-ownership to more choice and constructing housing for all tenures has been clear. What is less clear, is the impact of that change on existing Buy-to-Let (BTL) landlords.

As part of that shift in the Government’s view, there has been a positive outlook for the Build-to-Rent (BTR) sector. The number of such developments has crept higher in recent years and now bigger increases are likely.

So far, so good news for those involved. But, what of the existing mainstay of the UK’s Private Rental sector (PRS), BTL landlords. How will they fair in this brave new world?

The Government’s Plans for Build-to-Rent

Currently, the plans around BTR, from the Government’s perspective, are generally beneficial. With a few dollops of interesting detail, on top.

First of all, encouraging businesses and investors to construct homes for the sole purpose to rent them out will benefit UK renters. It will also benefit the investors. But then, you rarely get one without the other, so this is no surprise.

Building modern apartment complexes and family homes for rent the rental market, provides much needed housing. But, while tenants will remain in BTR developments, overall ownership will change hands and that will happen quicker than some tenants expect.

We say that because of two reasons:

  • The current Conservative government is planning to agree fixed terms with developers – from 10-15 years – before the developers are able to sell those individual homes. Existing local authority tenants will get first refusal. But, if they don’t want to or can’t buy their home, it will be sold anyway.
  • The second reason, is that investments are often fixed term agreements too. Where an Investment Fund finances and runs a BTR development, a time will come when its no longer profitable – or fashionable – enough. When that time comes, they will sell the development.

What it All Means for BTL Landlords

As with everything relating to BTL landlords, there will be periods of high demand and high rents and low demand and rents. That won’t likely ever stop. Once more BTR developments hit completion and more rental homes hit the market, demand for privately let properties could slow.

However, remember that the UK’s supply of decent homes in the right places is woefully inadequate. And, although developers know there is demand for BTR, they will increase and decrease supply, as they see fit. That means there’s unlikely to be many instances of oversupply big enough to hurt profits.

In the longer-term, it also means perfect rental properties, will likely be available for sale. When developers or investors move on, private landlords will have the same purchasing opportunities as owner-occupier purchasers. Just like they do now.

Don’t Let BTR End Your Landlord Role

As you can see, we believe that BTR will be great for renters and over the longer-term, provide opportunities for private landlords. With that in mind, our view is if your BTL portfolio works for you now, just make sure:

  • You’re on top of your property finances.
  • Maintenance and plans for improvement are in place.
  • You keep abreast of the rate of development in the region you operate.
  • Be a good landlord that tenants want to rent from.

Doing all this should mean you weather any price impact from the expected growth of BTR. It will also put you in pole position to take advantage of future opportunities.

A way to make sitting tight even easier, is to get in touch with Incrent. Let’s discuss how we can take the stress out of life as a landlord.

 


Alessio Tondo & Fabio Tarantino
Two ordinary guys who turned their passion into a business.
Co-Founded INCRENT
Rent 2 Rent specialists, London
Focused on how to Increase Your Rental Income.

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