Our nation must deliver 250,000 homes a year to satisfy need. In 2015 it delivered 112,370. Working people contribute to pension funds, which in turn invest in a range of assets that provide them with an income in old-age. Such savings provide a secure, long-term pool of billions of dollars. Pension funds and other institutional investors are increasingly investing in new housing, delivering high quality, market-rented homes.
Build to rent homes are designed and built specifically for renting. The primary motivation of investors is to keep their buildings fully-occupied with satisfied tenants. That means offering longer tenancies, other flexibilities (to personalize the home for example), good onsite amenities, and good transport links for easy commuting. Blocks of apartments in private ownership usually suffer from patchwork management arrangements. With Build to Rent, everything is integrated. There is one manager for the whole building. Staff are not only from the world of housing but also from hospitality, in recognition that it is a service industry. Ultimately, many investors are seeking to invest at scale and offer consistent standards across different locations so that they can develop into brands that their customers trust and stick with.
As long-term investors, Build to rent providers’ only interest is in creating ‘places’ that thrive. Their investments will gain or lose value depending on their wider environment. They therefore have a huge motivation to ensure that not only their developments work well, but also the neighborhood and services that surround them. They have no motivation or incentive to leave homes empty. The quicker they are let the quicker their pensioners and other investors derive their income
Demographics, a lack of housing supply and lifestyle choices are all creating a need for more rented homes. Without adding to supply, such need simply creates pressure on existing stock, either to switch between tenures, or to accommodate more occupiers. Some communities are hemorrhaging their young talent because there are no obvious housing options for them. Just over half (51%) of private renters are under 35 years of age and 54% have no dependents, and so are unlikely to live in public housing. Build to Rent is about the mainstream market. Many are investing in Build to Rent, or are contemplating doing so, because it is delivering affordable homes for key workers and other important groups that are critical to their local economies.
To learn more about build to rent homes and the investment market in your area, contact an expert member of the 9 Core Realty team!