Samir Salya on London’s build-to-rent boom

A new breed of hotel-style homes for renters in London are springing up due to the affordability crisis surrounding getting on the housing ladder.

Property prices are fast outstripping wage increases in London, which has led to many people simply not being able to afford to rent. Developers have come up with a way to provide hotel-style homes in the burgeoning build-to-rent sector.

New homes for renters

Reports say that around a quarter of households in the capital will be renting by 2021. This has led to the boom in the build-to-rent sector, which is now worth around £25 billion according to Knight Frank. Over the next five years, the sector is expected to be worth £70 billion as renters increase in numbers.

London is home to half of the 60,000 build-to-rent properties that are currently either under construction or planned in the UK. However, this only serves a tiny segment of the expected demand from the 2 million plus renters expected.

The rise of build-to-rent

Historically, the letting market has been led by buy-to-let investors. Around 75% of renters are living in homes managed and owned by private landlords. Build-to-rent developments owned by large-scale corporate landlords will change the face of renting in London.

The sector offers more variety in types of homes that renters can choose. It’s also likely to make tenants feel more secure due to tenancy contracts of up to three years.

Vantage Point

Vantage Point is Essential Living’s first build-to-rent development and opened in Islington last year. It’s located above Archway Tube station and offers the kind of benefits that are likely to be seen more frequently. These include fully furnished accommodation, access to a duplex lounge, communal living spaces, swimming pools, gyms and car sharing facilities.

Londoners looking for rental accommodation cite good transport links as the number one priority. In many cases this supersedes the need to stay under budget. This is likely to increase the popularity of build-to-rent hotel style developments even more.

Prices at some if these developments start at around £250 per week, but can easily increase far beyond this depending on the services that are included. The facilities that can bump up the price include fully furnished apartments with free Wi-Fi, a 24- hour concierge and hotel style reception.

Why there are more renters

The report from Knight Frank also shows that more than half of renters in London are routinely spending more than 40% of their income on rent. Separate research from Hamptons International suggests that there are clear reasons for the rising number of renters.

It would take a typical single Londoner more than 18 years to save a 15% deposit in order to buy a home. For a couple, it would still take 11 years. No wonder then that renting is more and more popular in the capital.

About Samir Salya

Samir Salya is the Chairman of Reign Holdings, and is involved in UK and UAE real estate and construction. Samir holds over 20 years’ experience in executive management, business expansion, performance improvement, sales and marketing.