University students – just a few years ago – expected and tolerated the traditional ‘grotty’ student flat. Cheap to run, cramped and unedifying, but it was ‘home’. Then along came build to rent student blocks, a whole new world, to study, relax and sleep in clean if simple, units.
Graduating and moving onto jobs in the cities, they were unlikely to want to rent a tatty terrace and lo, they have, even more recently, found blocks of smart new build-to-rent homes and became what we now know as millennials.
Many don’t want to own their own home and they are primed for this new rental alternative, at a time when mortgage redemption rates in the traditional buy-to-let sector surge.
Millennials, ready for a new solution in rental accommodation, are driving the growth of the UK’s PRS residential property market, as new figures suggest that the number of private landlords leaving the UK’s traditional buy-to-let property sector is rising. Over the next decade, the number of build-to-rent homes will increase from 30,000 to 1.7 million.
A European law firm, Fieldfisher, says that this demographic makes up 14% of the UK population, with increasing numbers turning to the private rental market, but as they become more frustrated by the insecurity of traditional buy-to-let properties, they are leading the growth of the modern build-to-rent sector, particularly in major UK cities.
Build to rent
Recent figures published by Savills show that around 120,000 buy-to-let mortgages have been redeemed since the introduction of the additional home stamp duty surcharge in 2016, aimed at professionalising management levels in the rental market.
The numbers suggest that many private landlords are now leaving the buy-to-let market, though there is still some way to go. Savills outlines that, out of 5.2 million households in the UK’s rental market, just 30,000 units are build-to-rent.
But this underlines the huge investment potential of the sector. Savills forecasts that, over the next decade, the number of build-to-rent households will increase to 1.7 million, while the value of the build-to-rent market will rise from its current value of £10 billion to £550 billion, around one third of the total value of the UK’s private rented sector.