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In recent times, PRS has been gathering momentum with the emergence of build to rent developments that offer purpose-built homes tailored to the needs of modern living. Traditionally the rental market has been dominated by small-scale landlords, but the Government has shown support for a professional and more regulated private rented sector that can deliver rental units on a much larger scale. Similarly in London, Mayor Sadiq Khan is looking at measures to improve the capital’s PRS offering and is actively seeking to encourage more purpose-designed build-to-rent properties as part of a drive to professionalise the sector.
The UK faces a critical shortage of rental housing according to RICS. Part of the rising demand for rental homes comes from the increased mobility of the jobs market, where there is global workforce that often requires a flexible living situation. There is also a greater acceptance of renting as a lifestyle choice.
The step-change within the sector has been driven by the rapidly rising levels of institutional investment, meaning build to rent developments have emerged as a viable asset class. The UK is moving towards a version of PRS based on the multi-tenure model that is well established in the US and Europe, where institutionally-backed platforms are created specifically to design, build and manage rental properties. It is predicted that institutional investment in the UK rental sector will treble in the next five years, meaning the whole dynamic of the UK rental market will evolve.
This move towards large-scale, professional investors not only means that rental developments can be delivered on a much larger scale, it is also helping to drive up standards of rental accommodation and levels of customer service. Providers have a real opportunity to develop a ‘brand’ for their rental schemes, which will in turn add value. The so-called ‘Generation Rent’ cares about service and appreciates the hassle free experience and peace of mind of renting from a large, professional landlord. They also benefit from the ancillary amenities that are often on the doorstep, as part of a purpose built development.
The enhanced pace of delivery that can typically be achieved with PRS sites can have a transformational effect on a regeneration area, particularly in circumstances when PRS and open market sale can be brought forward together.
In the North West through our house building partnership with Sigma Capital we have completed or are building 2,500 new PRS homes, spanning 30 regeneration sites including Norris Green Village in Liverpool and New Broughton Village in Salford (pictured above). We are also expanding our relationship with Sigma into the West Midlands. Sigma, which is establishing itself as the UK’s largest funder of PRS housing, is working to build a large scale one-stop shop private rented model that is capable of delivering in excess of 20,000 new rental homes throughout the key regional cities in England. Additionally, in London the fifth phase of Acton Gardens includes a dedicated block of PRS homes, which are currently under construction.
By introducing PRS homes at a number of our key regeneration sites we are increasing the speed of delivery and the tenure offering thereby widening the appeal of our homes. Working with our partners, a rental offering that allows tenants to choose a well-appointed home that suits their lifestyle and their budget, along with the high levels of service and amenity that go with it is being established.
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