Build-to-rent homes are built specifically to rent out. Rather than being owned by a private landlord, private firms own the homes and manage the property themselves.
You can usually find these properties in major cities. There are many build-to-rent London properties, as London has a greater need for affordable housing as it is a major city.
Rent-to-build properties are usually fully furnished so that they are readily available to renters and usually only require one month’s notice. They must be apartment buildings with a minimum of 50 residential units to qualify for the scheme.
This comprehensive guide will explain how build-to-rent schemes work and the benefits of this scheme for investors.
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How Do Build To Rent Schemes Work?
Build-to-rent buildings meet all the requirements of modern living, with additional features for those willing to pay more. To get planning for this type of property, there are certain conditions which you must meet.
Build To Rent Scheme Requirements
When planning a build-to-rent scheme, local housing planning authorities must determine the need for affordable housing in the area for those who wish to rent.
If there is a need for affordable housing, those planning the build-to-rent should develop a planning policy that sets out the approach to accommodating and promoting the affordable housing scheme.
20% is generally the number of homes in a development that should be affordable, and to deviate from this benchmark, the housing provider must make a case stating why. The minimum rent discount for affordable homes is 20%, and you should calculate the discount when the home is rented out or when the tenancy is renewed.
These factors determine the eligibility of renters for affordable housing:
- The agreement of eligibility between the local authority and scheme operator
- Local household income levels
- Local rent levels
Check out the official government website for more information on build-to-rent schemes
Property Management In A Build To Rent Scheme
One of the significant benefits of a build-to-rent scheme is providing property management services to increase your income. Providing property management services will make it easier for your tenants to make complaints, report maintenance issues, and get these issues resolved quickly.
Providing property maintenance is more accessible in this type of property, as the homes are all in one place and were built at the same time meaning repairs and maintenance needs will be easier to predict and resolve.
Property Management Software
To make property management more straightforward, you might want to consider investing in property management software that can provide services such as:
- Online accounting
- Online maintenance
- Vacancy and prospect tracking
These are just a few of the functions that property management software can provide.
Is Build To Rent Affordable For Renters?
Build-to-rent schemes can be more expensive than other rental properties in the area. This is due to the extra facilities included for renters, such as:
- Communal spaces
- Laundry facilities
- Green outdoor spaces
- Gyms
- Indoor lounges
- Concierge services
It is easy to see why a well-managed block with extra amenities and longer tenancies available would be more expensive. The additional essential amenities can drive the price of rent up by up to 8%.
Investment Benefits Of Build To Rent Schemes
The cost of building a build-to-rent property is much lower than if you were to buy a property already built.
Investors may also acquire a government grant or loan to assist with the costs of building the property.
New builds also have the added benefits of warranties and guarantees on building works, interior fittings, and decreased need for maintenance. The property will not have undergone any wear and tear.
New builds are also more energy-efficient and safer due to the up-to-date security and fire safety measures.
Investment Risks Of Build To Rent Schemes
When investing in a build-to-rent scheme, there are some risks that you will need to mitigate to ensure that your property is a profitable investment. To do this, you will need to:
- Have an accurate understanding of the demand for affordable housing. Major cities are an excellent place to situate affordable housing as you will always find renters due to the influx of students and young people working in the city
- You will need to ensure you have the proper planning permission that accommodates your intentions for the build
- You will require proper certification for a build-to-rent scheme, such as warranties and guarantees, and health and safety certification
- When planning, it is crucial to have a budget. To stick to your budget, you will need to get quotes from contractors, ask suppliers for a discount, and hire a project manager to oversee the building process and make sure the project comes in on budget
If you mitigate these risks, this should make the building the housing more likely to be successful so that you yield the highest possible profit.
Where Can You Find Build-To-Rent Properties?
150,000 build-to-rent properties have been completed, are being built, or have received planning permission.
The best places to look for one of these properties include:
- Manchester
- London
- Birmingham
- City outskirts
You can find the most build-to-rent properties in major cities and on the outskirts of cities where the need for affordable housing is more significant.
Summary
The build-to-rent enterprise is a great way to provide affordable housing and makes for a good investment opportunity. The properties can come with excellent communal amenities that make up for the increase in cost.
For investors, build-to-rent properties can provide a cheaper alternative to buying a property outright to rent.
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Millie is a perfectionist with a passion for property and writing articles. You’ll find her researching the latest housing trends and the newest up and coming areas worth investing in. Read more about Millie here.
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