New planning regulations have supported a 40% jump in the level of the rental homes being built.

The number of new-style build-to-rent properties being constructed has soared by 40%, with more homes in the pipeline.

The properties are high quality and professionally managed homes that have been built specifically for renters. They have corporate landlords and longer tenancies, as well as a typically offering a range of extra facilities.

More than 30,000 of the homes have so far been completed, with a further 43,374 underway and nearly 67,000 in the process of receiving planning permission, according to the British Property Federation.

Why is this happening?

A number of factors have combined to give the build-to-rent sector a boost.

On the one hand, high house prices and the large deposits lenders demand have led to an increase in the number of people renting a home at a time when tax changes mean many small-scale landlords are exiting it.

At the same time, under the Government’s revised National Planning Policy Framework, local authorities have been asked to identify how many new rental homes their area needs to plan for the demand.

The framework also specifically references build-to-rent, providing guidance for local authorities on dealing with planning applications from the sector.

In addition, build-to-rent has benefitted from Permitted Development Rights, under which certain buildings, such as offices, can be converted into residential property without the need for planning permission.

Around 30% of completed build-to-rent homes in London have been delivered through this channel.

Build rent homes in StratfordAbove: This three-bedroom build-to-rent flat in Stratford is up for grabs at £2,625 pcm with Get Living

Who does it affect?

The build-to-rent sector has both pros and cons for prospective tenants.

On the one hand, the properties have longer-term contracts, offering tenants more stability, while their landlords, who are typically institutional investors or developers, pride themselves on their professional, service-led culture.

The properties themselves are purpose-built for renting and of a high-spec, often coming with attractive add-ons, such as gyms, super-fast broadband and private entertaining facilities, as well as concierge services and on-site management.

The downside is that all of these perks come at a cost, with the properties commanding an average rental premium of 11% over similar homes that are available to let in the same area, according to analysis from investment management company JLL.

What’s the background?

Build-to-rent homes were initially more common in London, but the recent building boom has led to a catch up outside of the capital, with 14,801 of the homes now completed in London and 14,615 across other regions.

A further 24,010 homes are under construction in the regions, compared with 19,304 in London.

As the sector has expanded it has also diversified away from apartments, with 15% of the schemes in the pipeline including houses.

Top 3 takeaways

  • The number of new-style build-to-rent properties being constructed has soared by 40% as the sector continues to grow

  • More than 30,000 of the homes have so far been completed, with a further 43,374 underway and nearly 67,000 in the process of receiving planning permission

  • The properties are high quality and professionally managed homes that have been built specifically for renters

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