How you can invest in build to rent

Posted by Mark Lloyd, Property Master Academy on 25 September 2019 | Comments

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Build to rent is a growing sector. According to estate agent Savills, at the end of March, there were more than 30,000 completed build to rent properties in the UK – that’s an increase of 34% on the same time last year. *

And it looks like demand for this type of rental property is set to grow. The London First group reports that by 2025, just under 40% of all London households will be living in the private rented sector. **

build to rent property investment

Why is build to rent so popular?

One of the reasons the build to rent sector is growing so rapidly is that there’s a shortage of housing, and rental properties help to plug the gap. Many people are not in a position to buy property, or at least, not in the location they want.

However, there’s also another reason. Some tenants feel that amateur landlords offer an inconsistent and inadequate service. By contrast, corporate landlords in the build to rent sector are providing high-quality management services with luxury facilities.

For example, some of the new build to rent complexes comes with onsite facilities such as gyms or swimming pools. Because it is a complex, it tries to cater to its community of renters by including public spaces for socialising.

For the modern renter, as well as better accommodation, there’s also the enticement of a secure, longer lease of around three years. However, all of this comes at a price.

According to real estate services firm JLL, who reviewed 25 rental schemes, on average, the rent on build to rent flats is 11% higher than surrounding rented homes. ***

How to invest in build to rent

As a property investor, you may feel the build to rent market is out of your reach. But there are ways you can invest in the trend.

Build to rent funds are becoming popular investments. Generally launched by large pension and insurance funds or asset managers such as Legal & General, Aberdeen Standard and M&G, build to rent schemes can offer an appealing investment opportunity.

Or you could invest in shares in companies such as Grainger, the UK’s largest private landlord. The company has 8,237 units in cities including London, Manchester and Birmingham. Grainger has just signed a deal with Transport for London to build 3,000 properties above and around Underground stations. The group’s earnings grew by 26% to £94m between 2017 to 2018, partly driven by rental growth.

Build to rent is spreading to more cities

Build to rent schemes have so far mainly focused on London but are beginning to spread to other major cities.

For instance, investment bank, Goldman Sachs, recently entered into the build to rent sector with a £184m investment in what is set to be Birmingham’s largest residential tower. Meanwhile, Legal & General have funded Buchanan Wharf, a 324-apartment scheme on the south bank of the River Clyde in Glasgow.

More build to rent developments are being planned across the country in cities such as Manchester, Bristol, and Leeds.

Would you like to learn more about property investment?

Register for our course: Houses of Multiple Occupancy (HMO) to find out how you could earn £30,000 - £35,000 income per year on every property.

Dates: 18th October 2019

Venue: Park Inn, Heathrow + One Day HMO Tour (date tbc)

Book now: limited to just 30 places




build to rent, property market, property trainer