Manchester is a “test-bed� for build-to-rent apartments

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Build to Rent:

In the Manchester and Salford area there are over 5,500
Build-to-Rent (BTR) apartments currently under construction, that’s according
to a report by the British Property Federation and Savills. Travel into
Manchester by car or public transport and you see a skyline awash with cranes
and high rise blocks under construction, or nearing completion. Where is the
demand for all this new accommodation in the city, one might well ask?

Manchester and Salford are providing the UK’s second-biggest
commitment to new rentals outside of London, and according to BPF the biggest
overall commitment on a per-capita basis. It’s perhaps no surprise given
Manchester’s continuing popularity as a centre for growing employment (firms
moving in especially in the tech, banking and hospitality sectors) and inner
city living, with a growing renting population and still a chronic lack of
supply in some parts of the city.

Some in the city are hailing this a revolution in renting and
a test-bed for the rent of the country. Some argue that the new supply of
rented accommodation will ease housing shortages and provide greater long-term
security for those tenants who want extended leases and improved management of their
rental properties.

Speaking at Insider Media’s (publisher of North West Business Insider) Residential
Property Conference, which took place on 5 September in Manchester, Ian Scott,
Lambert Smith Hampton’s national head of build to rent and PRS, said the
lessons investors are learning in Manchester are informing new built-to-rent
(BTR) schemes in cities like Birmingham and Bristol.

Scott referred to the city developments as “the BTR learning
curve� and said that one of the key lessons was that there is much more demand
than initially expected.  He gave the
example of the new Anaconda Cut development on Greengate where the premium
offer rents for a two-bedroom apartment can hit £1,350 per month, and where
“about 300 units have been let in six months”.

Scott also said that, contrary to the generally touted maxim
that tenants desire long-term security above everything else, the people living
in BTR apartments in Manchester were “transient” and wanted an
“easy in, easy out” route. He said, “furniture packs and bonds
instead of deposits were proving popular.� Andrew Cook of M&G Real Estate, one
of the main investor managers in these schemes, said that “although this
institutional funder offers tenants three-year leases at its properties, the
take-up of longer terms at the outset is still low.�

The developers in these schemes are finding that bin storage
needs to be larger than originally thought in the designs, and larger parcel
rooms were another consideration said Mr Scott. “We think drones will
deliver Amazon parcels to the roofs of build-to-rent buildings and the parcel
room will be at the top of the building.”

The owners of these schemes tend to be large companies, so
what could this mean for small-scale landlords and tenants in and around
Manchester and Salford?

These new units offer premium professionally managed accommodation
at premium rents. Not all tenants will be in a position to afford these rents
so there’s still a healthy markets for individual lets elsewhere.

However, Scott says:

“…it’s likely that the housing market will be turned on its
head, with many more rental properties becoming available. Given the laws of
supply and demand, this should have an impact on property rents: if more
properties are available, then rents should stop increasing exponentially like
they have in recent years.

“It may all be swings and roundabouts, however, as the
scrapping of tenants’ fees… may push up rents, to an extent. But this is all
guesswork, of course – the real test will come when this influx of rental
property hits the market in the coming years. As agents, it is our duty to
watch these developments and react accordingly to ensure that we continue to
please our clients.

At the least, “we’ll continue to see very strong competition in the rentals market – the best properties are snapped up in days or even hours, and would-be renters need to be quick off the mark to find the crash pads that they really want.�

Build to rent

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