Build to Rent & PrOPERTY LAW
Over past few years the property sector has seen a rise of interest, investment and management within the Build to Rent (“BTR”) sector.
As PROPERTY LAWYERS, we work live and breathe all things related to:
……and the build to rent model encompasses all of these services.
Build to Rent is a term used to describe private rented residential properties, which are designed and built for rental purposes instead of sales. In 2012 the government launched a series of initiatives to help the UK increase its supply of quality homes because, let’s face it, we desperately need more. And that’s the launch of the UK’s BTR scheme, allowing high quality homes available for market rent in the private sector.
The BTR model allows property investors to achieve long-term investment returns, while providing renters with a range of perks from longer tenancies to a dedicated on-site manager, concierges and purpose built communal spaces. As anyone in the property leasehold industry knows, leases are complex, and the BTR scheme hopes to address many of the problems that renters face, such as short-term lease problems to crooked landlords. We all need someone to live and we should all have the right to understand what our rights are.
The following table is collected from Savills regarding the build to rent sector and recent data:
Tenancy or lease
Technically in law, there is no difference between the terms “tenancy” and “lease”. However, statutes relating to letting residential property most often use the word “tenancy” while those regulating commercial occupancy or blocks of flats, use the word “lease”.
With the Build to Rent model there are no long leases – only tenancies. The tenants are of course restricted in what they can do within the apartment they are occupying but one major aim of build to rent is to provide apartments that are perfect for the renter – super modern with hard flooring, easy to maintain, open plan designed, and often pet friendly.
Build to Rent v Private Rental for Tenants
Managing Agents for Leasehold and BTR
Managing agents have different strengths for different areas. However, if thinking of the qualifications for either one, then these are the differences (together with these qualifications, hospitality and events organisation qualifications could be good also):
Build to Rent Management
It’s perceived that property managers for leaseholds need to be able to ‘hit-the-ground-running’, operational; whereas BTR might require a more hospitality style management with the more experience of face-to-face customer interaction the better. Having said that, we all know property managers need to be good under pressure, organised, finishes task and really wants to solve problems.
We work with so many managing agents who work extremely hard to ensure their landlords are satisfied and their tenants are equally happy. We understand the constant juggling!
Mental Health for Tenants in the UK
We all know that loneliness, through factors such as living in isolation and community breakdown, is a big factor councils and mental health charities. Perhaps lockdown in COVID19 will have changed many of us; checking on our neighbours more, spending time talking to our neighbours, and generally interacting more as a society. Especially in cities, it’s very easy to put our heads down and never acknowledge anyone. It would be lovely to see a positive outcome from such a sad time (health and financial) for many.
Investors like the model of BTR, not only as an excellent return on their investment through a constant rental income stream, but seeing how exceptional communal spaces can be, that are well cleaned, offering concierge systems and a feeling of inbuilt community.
We know that developers place a lot of value in building high-quality leisure spaces and communal areas that can add great value to their BTR properties. Wellbeing is paramount for BTR investors and developers knowing that they are supporting a model for positive living space, combating loneliness and building communities. Having happy tenants, means a lower turnover of them, equalling a consistent rental income stream. It’s a Win:Win situation.
To wrap it up
There is no denying that over the past 30 years, the UK has loved its love of bricks and mortar and living a capitalist, risk-taking culture. HOWEVER, new generations’ expectations and needs versus a big mortgage don’t seem to be on their agenda. They simply cannot afford that choice, but also don’t necessarily want it. They are looking for different models to live and work within. The new now – through COVID19 times and beyond – will change the way we all work, commute, exercise, live, and travel.
Whether it’s a lease or tenancy there is a need for everyone in the property sector to keep talking to each other, ensure there is synergy and that contracts and agreements are clear to make sure residents/tenants are well looked after. This quote from a French journalist who wrote an article in the Guardian back in 2016 summed up why the UK need to make changes within the rental market:
“In Britain, landlords seem to have only rights, and tenants’ only duties. I remember rents going up every six months (in France they are controlled), rain pouring through the ceiling over my bed, walls only standing up thanks to the million coats of paint applied by generations of students, and leases so short you needed to move almost every year…….. I understood why they longed to own their home, considering the awfulness of renting. A self-fulfilling system, this was.”
Why are Brits so obsessed with buying their own homes? Agnès Poirier
Times are changing!
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