UK: How Build-To-Rent Offers Opportunities To Housebuilders

Last Updated: 27 June 2018
Article by Vicky Fowler

Build-to-rent is an emerging property class that is attracting attention in an uncertain climate as an alternative form of development.

In a recent report from The Guardian, it was announced that property experts in London are predicting dangers for the housing market. London house prices tumbled in March this year with the annualised rate of inflation dropping to minus 0.7%, the biggest drop since 2009 according to official Land Registry figures.

In contrast, prices are rising across the rest of the UK with the overall rate of house price inflation at 4.2%. The Guardian reported that the average house price has risen to £224,000, £9000 higher than it was a year ago.

With house prices outside of London continuing to rise, it is becoming increasingly difficult for people to get on the property ladder. Back in March, The Independent reported how the process for first-time buyers has become more expensive in recent years with research revealing that 69% of people think it is now harder to buy a home. With people finding it so difficult to access the property ladder the increase in private renting makes sense for couples and families that are unable to afford the homes that they need.

The emergence of build-to-rent developments

Build-to-rent developments are being seen as a crucial element of the future residential makeup of the UK. In our report 'Planning 2020: A new framework for modern Britain', 87% of housebuilders stated that they anticipated more involvement in build-to-rent development over the next three years in comparison to the previous three.

In Sajid Javid's Housing White Paper, published in February of last year; it was acknowledged that the proportion of people living in privately rented accommodation has doubled since 2000. Furthermore, home ownership is at its lowest level in 30 years. With house prices on the rise, build-to-rent developments should be seen as a logical consideration for housebuilders.

Build-to-rent is where private residential developments are specifically designed for renters. In some cases, this includes on-site maintenance teams, concierge services and communal areas. They often include the ability to sign up for three-year tenancies, allowing renters to integrate more effectively in the community rather than moving on after 12 months.

Build-to-rent schemes are gaining more traction as they are no longer seen as a solution purely targeted toward single city dwellers or twenty-something couples. Developments are increasingly beginning to be primarily made up of two to four-bedroom family homes. Build-to-rent accommodation is also being considered as an alternative to retirement housing as it has the benefit of having no long-term financial commitments or contentious contract clauses.

Why are build-to-rent developments beneficial to investors?

One of the reasons that housebuilders are beginning to be drawn to build-to-rent developments is that they are a completely different asset class to the traditional build-to-sell residential schemes of the past. Organisations currently contributing funds to build-to-rent schemes are investors such as pension funds that historically would invest in commercial property. These organisations are diversifying their investments, attracted by the long-term, low-interest model of build-to-rent that provides an ongoing income stream.

What are the next steps for build-to-rent developments?

The policy frameworks that are currently in place are designed for the traditional build-to-sell model of development. The viability of build-to-rent developments has been a topic of ongoing debate and is an issue that the Government is now addressing.

The Housing White Paper set out proposals to amend planning policies so that councils are required to plan for more long-term build-to-rent homes. The form of the proposed policies was published back in March 2018 as part of the National Planning Policy Framework and associated Planning Practice Guidance consultation.

The proposed policy supports the provision of affordable housing on build-to-rent schemes being by default in the form of affordable private rent with 20% being generally a suitable benchmark for the level of affordable private rent homes to be provided in any build-to-rent scheme. Affordable rent should be at a level that is at least 20% less than private market rent (inclusive of service charges). When conducting research for our report 'Planning 2020: A new framework for modern Britain', housebuilders were asked what the Government could do to support the build-to-rent market. 70% of respondants suggested the measure of assessing build-to-rent properties within affordable housing quotas.

The policy also recommends longer tenancies of over three years to attract families and that these longer tenancies should be secured by planning condition. There would, however, be no obligation on customers to take up the offer of a three year tenancy and there should be an ability to break on one month's notice after the first six months without a break fee.

What are the challenges for build-to-rent developments?

While build-to-rent offers benefits to housebuilders, it does not come without its challenges. Considering the infancy of the industry, ensuring the commercial viability is a priority as well as having the skill-set and employees to actually deliver the developments. It is important that time is taken to understand the need for build-to-rent properties in potential locations, resident demographics and local housing stock to identify financial viability. Countries such as the US, Germany and France use build-to-rent as a prevalent housing model and it would be valuable to consult with experts in these locations.

Why are build-to-rent developments an opportunity for the UK?

As seen with the recent London house price tumble, real estate is currently going through a period of change. Alternative developments such as build-to-rent offer housebuilders new opportunities in a changing market as more people move away from buying property. Attractive to both investors, housebuilders and renters alike, this new kind of development could contribute to easing the UK's housing crisis. Our report 'Planning 2020: A new framework for modern Britain' is recommended for housebuilders considering the future of their operations. The report examines build-to-rent in further detail as well as regional devolution, pre-commencement conditions and planning issues.

Read the original article on

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions