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Sofa, so good for Build to Rent?

tenants on sofa image

The batch of low-rise apartment blocks recently completed next to the East India Dock DLR station in East London looks much like dozens of similar developments across the capital.

Constructed within a former council estate, there are 233 smart apartments made up of both private and affordable units all within the Aberfeldy Estate, funded by city money, built by Wilmott Dixon and marketed under its be:here offshoot.

What the casual dog walker staring up at its angular balconies won’t know is that this a first for the UK. Constructed under the government’s Build to Rent scheme, all of the private apartments within the development are being rented out directly by be:here to tenants. The block is to be managed entirely by an in-house team.

Wilmott Dixon’s be:here is in the process of acquiring further sites across London and at central locations in Manchester, Birmingham, Bristol and Leeds that are each capable of accommodating between 100 and 400 apartments.

We’ll be working with institutions that recognise the sector’s enormous potential to provide long-term revenue to their portfolios. Andrew Telfer, Wilmot Dixon.

Andrew Telfer imageAndrew Telfer, Divisional Chief Executive at Willmott Dixon Regen, says, “I’m delighted we’ve reached agreement with M&G (Investments) on our first project in East London; it’s the start of a process where be:here will create homes for private rent on an ambitious scale.

“We’ll be working with institutions that recognise the sector’s enormous potential to provide longterm revenue to their portfolios and our role in making that
happen.”

Wilmott Dixon, which already has three other sites in Barking, Kew and Hayes, is not alone, although it is the first company to build specifically for the Build To Rent market. There are other players including property firm Grainger and Essential Living, which have either yet to complete a build or have bought existing apartment blocks and then converted them to fit the new model.

rented furnishings imageOne company that’s hoping to benefit from this boom is Warren Buffett-owned furniture rental firm Roomservice by Cort. Its Head of Residential, Tim Swaddle, says the company is hoping that this sector takes off in the same way it has on the other side of the Atlantic.

Greystar, one of Roomservice by CORT’s clients in the US, owns or manages over 400,000 apartments in America and has property worth some £12 billion across the world in 77 countries.

New ownership model

“The kind of developments that Greystar builds and operates, and that are just starting in the UK, are very different from other ownership models in the rental sector,” says Tim.

“And not just because of their scale, but also the way they are managed and designed. In the US they are called ‘multi-family apartments’ and offer an extra layer of professional management and a concierge-style service, plus the buildings have been designed with families in mind.”

“For example, the bedrooms are all of equal size with their own storage areas and are accessed easily from the central lounge/dining area rather than being all at the back.”

The idea behind these developments is that the people who live in them don’t just rent the property but also everything else including the WIFI, power and even the furniture, which is where Roomservice by CORT hopes to expand its business.

But to be successful, there is going to have to be a substantial change in how UK tenants see renting. While US and some European tenants are used to renting properties unfurnished, it is not so common here.

“This is driven to a certain extent by the letting agents who may advise that their landlords that their rental properties should be furnished in order to be let,” says Tim.

Roomservice by CORT suggests that this may change – and that Generation Y, when it matures, will adopt a different life model. More people will rent or hire the items in their lives including phones, white goods, furniture, cars and apartments while they concentrate on building assets elsewhere.

BPF report image

The BPF report indicates that renting is changing, as tenants want modern homes.

This could include building a businesses or investing in the City, for example. But if this sounds improbable then consider this. As ‘generation rent’ finds it more and more difficult to get on the property ladder, so alternative ways of living may have to be offered to them.

The British Property Federation (BPF) recently held a ‘Build to Rent’ event and launched a Build to Rent manifesto, which explains its support for what it is calling “UK’s newest housing sector.” It focuses on the need to not only build more homes, but to build the right sort of homes to meet the needs of future generations – already many more people than ever before actively choose to rent – and they are looking for attractive, comfortable homes to rent, not shabby, cheaply presented second rate homes. You can download and read this very interesting report: http://www.bpf.org.uk/sites/default/files/resources/BPF-Buildto-Rent-Welcome-to-the-UKs-newesthousing-sector.pdf

What about agents?

It is not clear what role lettings agents will have in this new sector but that they are very likely to have an advisory role as these developments are being planned, much as they do in other parts of the private rented sector. At the East India apartments it appears to be direct to the tenants, as they are currently on Rightmove and Zoopla with the agents as be:there.

“I think there is a lot of debate within the agency world about how you address this category,” says Tim. “It is very different to the individual landlord who may own two or three properties. There are only two or three real Build to Rent projects properly up and running at the moment so it’s very early days.”

Furnishing specialists

rental interior imageRoomservice by CORT is one of several companies specialising in furniture rental for rented homes. Roomservice by CORT is part of a US company that has pioneered the furniture rental market. Its market is varied – from relocating families who need some furniture for a month or so while their own is shipped back to the UK to those who want to rent furniture indefinitely.

“The crucial part of our service is that people can choose which furniture they want to fit their lifestyle and their budget,” says Tim.

“It also enables high street letting agents to offer furnished apartments to potential tenants who want a certain apartment in a particular area in which there aren’t any furnished flats. It also means an agent can show someone an unfurnished property but then offer to furnish a property and offer it as an addition to the monthly rent – so it’s an extra selling tool for agents.

“And we can contract with anyone including the tenants directly although usually landlords like to be in control so we tend to contract with them.”

Roomservice by CORT also gives agents referral fees at a percentage of the furniture rental contract which, Tim says, at smaller agencies tends to go to the negotiator which in larger ones, it goes to the head office.

rental exterior imageDavid Phillips also supplies a wide range of furniture to buy or rent for let property. They supply individual items or packages to suit various size homes, with a minimum rental period of one month – you can’t get much more flexible than that.

One of their packages to buy is a high specification but low cost student property package, comprising a sofa, coffee table, dining table and chairs, double bed, chest of drawers, bedside cabinet and a wardrobe – all for £899.

Naturally, the packages rise in price as they get smarter but their Diamond package means that landlords can furnish a three-bedroom home in style for £8005.

Loft Interiors is another very reliable supplier offering some stylish and appealing ranges at very reasonable cost. Landlords can buy directly from their warehouse or have it delivered. Loft Interiors also supply electrical appliances, lighting, flooring, curtains everything down to the essential loo brush – so it’s a one-stop shop for the landlord in a hurry.

Contacts

  • www.be-here.co.uk
  • www.davidphillips.com/rental
  • www.loft-interiors.co.uk
  • www.roomservicebycort.com

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