Built to Rent Investments
We have all heard of “Buy to Rent” but investors are now getting into a new property niche: build to rent.
Britain is witnessing a real boom in this sector and in 2017, the total capital turnover within this industry exceeded £2 billion for the first time ever.
Many of the investors are actually coming in from North America.
Built to rent investors from America and Canada are very familiar with the townhouse and family model of homes.
Most of the investors have come from this market and are building homes for families to rent, right here in Britain.
A staggering 60 per cent of the homes purchased and built for rent were in the London area.
There are also massive projects going up in Sheffield, Manchester and Birmingham.
So far, there have been more than 20,000 homes built specifically for the rental market.
It is no longer an emerging market but one which has already emerged.
But why is this happening? It is simple really when you think about it.
The housing market has a bubble that has not burst but will not dissipate or increase either.
The House Price levels
The house price levels are at such a bewildering high that most families in Britain are too way off financially to afford to buy.
Tighter lending controls from banks and mortgage lenders, since the 2007 Housing Crisis, has forced many lenders to watch carefully who they can and cannot lend to.
Most families need to put down a deposit of 20 or 25 per cent of the entire cost of a home as a down payment before any sort of a mortgage is approved.
On a house costing £200,000, it means a family need £50,000 as a down payment before any mortgage approval is even considered.
In the rental market, usually, landlords will require one month’s rent in advance and one month’s rent as a deposit before a tenant can move in.
It is not unusual for tenants to only have to find about £1,000 before the tenancy agreement and rental contract can start.
The rise in people moving into tenancy agreements should come as no surprise, especially when one considers the crazy prices at which homes have soared to in recent generations.
But tenancies have advantages that homeowners don’t actually realize.
Any mortgage can keep you tied to one property for most of your adult life.
A tenant can move in or out, if unhappy with the rental.