Lettings agents who ignore the growing build-to-rent (BTR) sector are missing a huge opportunity as the sector prepares to triple in size within the capital and beyond, Foxtons has claimed.
The estate agency, which likes to position itself as an early champion of the US-style of renting, says BTR properties are witnessing ‘soaring’ demand as many renters put accommodation quality and services ahead of affordability.
BTR developments are more expensive to rent in than traditional lets around them, the agency’s own research shows, including a 9.1% average premium for one-bed flats and an 11.3% premium for two-beds.
“Part of the BTR premium can be attributed to their new, or nearly new, condition,” says Sarah Tonkinson, MD of its BTR arm.
“It is also worth noting that premiums may look higher than the reality. Rent-free periods are sometimes used to entice renters at the beginning or end of a BTR tenancy, yet are not calculated in the average rent.”
The data and claims outlined above are within Foxtons’ latest London Lettings Report, which reveals that 8% of its long-lets this year have been within BTR developments, up from 2.2% four years ago.
“While BTR in the UK still only accounts for 1% of the private rental market, it has huge potential and is a sector Foxtons has supported for a number of years,” adds Tonkinson.
The report also reveals that demand for rented property in central London is ramping up again after falling off a cliff during Covid as many younger renters returned to their hometowns.
In Zone 1 registrations are up by 101% year-on-year and up by 72% in Zone 2. But although rents are still lower than pre-pandemic times, a lack of stock means rents are now rising by up to 7% in central postcodes as demand outstrips supply.