Colliers International’s Build-to-Rent Rental Insights
New research by Colliers International indicates that wholly owned professionally managed build-to-rent (BTR) apartment blocks achieve an average premium of 9.9 per cent (for one bedroom) and 9.4 per cent (for two bedroom apartments) more than the same comparison for the Buy-To-Let (BTL) market in the first half of 2018.
These premiums are marginally up from last year’s figures, which correlate with the findings that rental growth has been stronger in BTR schemes than in the wider private rented sector in the UK.
London, as the largest BTR market, achieved rental premiums of 10.2 per cent and 9.6 per cent for one and two bedroom apartments, highlighting the maturity and continued depth of tenant demand in our capital city.
Toby Nicholson, Head of Build-to-Rent at Colliers International commented: “The UK BTR industry will see a significant increase in demand for rental property with ‘Generation Rent’ set to swell to around six million households by 2025, which essentially represents 25 per cent of UK households who will be privately renting.
“While tenants largely retain a desire to own their home, it is well documented many still face the reality of a long tenure in the rental market. As such, developers, investors and operators continue to reinvent their approach to the market by offering a variety of alternatives as interest in new ways of living increases.”
From the 99 sample schemes, the research identified a concierge service, residents’ gym and lounge as three key amenities that were most common and that tenants pay for in professionally managed BTR schemes.
Even the schemes without these amenities fared better than schemes that are not ‘wholly owned and professionally managed’.
Mark Charlton, Head of Research and Forecasting at Colliers International added: “Our opinion of rental value took into account the location and quality of the individual scheme, applying subjective reasoning to assess the likely level of premium over the comparable schemes.
“We intend to continue this annual research with an increased number of schemes and data points.”
The Research Approach
The rental insight study highlights the ‘Rental Premium’ commanded across the UK for wholly owned, professionally managed rental stock over the buy-to-let market. It specifically analysed 99 Build-to-Rent schemes nationally, with a minimum of 50 one-two bed apartments. The research utilised 4000 rental comparables from REalyse, Zoopla and Rightmove, in addition to data from local agents, Molior and Colliers’ internal market intel. This dataset included ‘like-for-like’ BTL stock within a ½ mile radius.
In analysing this dataset, a qualitative approach was utilised as the rents for comparable schemes were found to be very location specific. A subjective opinion was formed on typical one and two bedroom rents for each scheme within the sample and compared against the equivalent one and two bedroom rents in the comparable dataset.
These premiums are marginally up from last year’s figures, which correlate with the findings that rental growth has been stronger in BTR schemes than in the wider private rented sector in the UK.
London, as the largest BTR market, achieved rental premiums of 10.2 per cent and 9.6 per cent for one and two bedroom apartments, highlighting the maturity and continued depth of tenant demand in our capital city.
Toby Nicholson, Head of Build-to-Rent at Colliers International commented: “The UK BTR industry will see a significant increase in demand for rental property with ‘Generation Rent’ set to swell to around six million households by 2025, which essentially represents 25 per cent of UK households who will be privately renting.
“While tenants largely retain a desire to own their home, it is well documented many still face the reality of a long tenure in the rental market. As such, developers, investors and operators continue to reinvent their approach to the market by offering a variety of alternatives as interest in new ways of living increases.”
From the 99 sample schemes, the research identified a concierge service, residents’ gym and lounge as three key amenities that were most common and that tenants pay for in professionally managed BTR schemes.
Even the schemes without these amenities fared better than schemes that are not ‘wholly owned and professionally managed’.
Mark Charlton, Head of Research and Forecasting at Colliers International added: “Our opinion of rental value took into account the location and quality of the individual scheme, applying subjective reasoning to assess the likely level of premium over the comparable schemes.
“We intend to continue this annual research with an increased number of schemes and data points.”
The Research Approach
The rental insight study highlights the ‘Rental Premium’ commanded across the UK for wholly owned, professionally managed rental stock over the buy-to-let market. It specifically analysed 99 Build-to-Rent schemes nationally, with a minimum of 50 one-two bed apartments. The research utilised 4000 rental comparables from REalyse, Zoopla and Rightmove, in addition to data from local agents, Molior and Colliers’ internal market intel. This dataset included ‘like-for-like’ BTL stock within a ½ mile radius.
In analysing this dataset, a qualitative approach was utilised as the rents for comparable schemes were found to be very location specific. A subjective opinion was formed on typical one and two bedroom rents for each scheme within the sample and compared against the equivalent one and two bedroom rents in the comparable dataset.