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American and Continental style Build to Rent set to take off in UK
American style Build to Rent developments are catching on in the UK with the first due to be complete later this year and more set to come on stream in the next 18 months. The Build to Rent concept, known as multifamily in the US, could potentially transform the private rental sector into a service industry in the UK, according to industry experts. A report from law firm Addleshaw Goddard and the British Property Federation says the growth of the sector is good news for the economy, investors and tenants. With nine million people renting in the UK, Build to Rent has the potential to improve standards and provide better value and greater transparency. These developments are converted offices or purpose built apartment blocks which are professionally managed by specialist companies and rented out to private tenants. They mark a big step away from the traditional renting scene in the UK and some countries on the continent, including France and Spain, where residential properties are largely privately held and development of apartments has failed to keep pace with demand. ‘What it means for your average tenant is probably a better quality of life. When for example, the toilet breaks, there are people to fix it right away. As a tenant you don’t spend time managing the property, you get someone else to do it for you and you get on with living your life,’ said Adam Challis, head of residential research at real estate services firm JLL. Indeed, good maintenance of properties is an area where many small private landlords currently fall short. ‘Build to Rent has the potential to vastly improve standards in housing and because companies invest for the long term, they are more open to innovative design and more creative approaches which keep customers happy,’ said Marnix Elsenaar, head of housing at Addleshaw Goddard. As a growing sector, Build to Rent is now attracting the interest of investors. ‘The London story, and the UK story generally, is pretty unique in that we don’t have an institutional quality residential asset class yet,’ Challis explained, adding that this is set to change if the build to rent sector in countries such as the UK, Spain and France follows in the footsteps of the US. Multifamily investment is big business in America. Popular among private equity and pension funds, it offers some of the best returns in American real estate and last year saw record breaking volumes of $110 billion, topping the 2007 peak. And European countries such as Germany and the Netherlands already built up a multifamily market which continues to grow. JLL figures show demand for development and new build investments in the major German cities remains robust with €340 million invested in the first quarter of 2015. Similarly in the Netherlands, residential investment volumes hit €710 million, which is a 189 percent increase year on year and Sweden’s residential sector also continues to perform well. This bodes well for development in the… Continue reading
Short term rental market described as having potential for property investment
The supply of short term rental accommodation is not meeting a new demand from companies who are relying more on sort term employment models, according to a new real estate report. It means that those investing in the short term market in cities with demand in the sector are in line to reap the economic benefits, according to the Global Cities 2016 report from international property firm Knight Frank. It says that short term assignments are forecast to grow to over a fifth of all international relocations in the three years to 2017 meanwhile, long term assignments are expected to fall from 52% to 45% over the same period. However, supply of short term rental accommodation is struggling to meet demand in many established markets and the situation is compounded by the fact that short term lets often fall into a legal grey area. ‘Against this background, those cities that embrace the short term rental model stand to benefit in the future,’ the report points out. ‘For investors and landlords, there are clear long term rewards in the world of short term rental accommodation. Cities that embrace the flexibility of models like serviced apartments will reap the economic rewards,’ it adds. The research also shows that worldwide, the number of serviced apartments has grown by 80% since 2008 to over 750,000. The trend looks set to continue with the number of apartments increasing by as much as 18.2% between 2014 and 2015. The United States accounts for 61% of the world’s serviced apartment locations, followed by Europe at 17%, Australasia at 11% and Asia at 5.5%. The fact that demand exceeds supply puts upwards pressure on occupancy levels with nearly three quarters of global operators reporting a year on year increase. The report describes the private short let market as a potentially lucrative option and says that the reward from higher rental values, which are typically double those in the long term market, is balanced by the greater risk of void periods. However, private lets below a certain period of time are restricted in many key markets around the world. It also points out that while lets of less than 30 days are a grey area in New York for example, this has done little to diminish the growth of online short term accommodation providers like One Fine Stay and Airbnb. Despite many companies favouring serviced apartments for reasons of transparency and uniformity of service and quality, Airbnb is increasingly targeting corporate travellers and aims to grow this side of its business which currently accounts for 10% of stays. Continue reading
New manifesto calls for a more democratic planning system in the UK
A new manifesto has been launched in the UK to fight back against what it calls an assault on the country’s planning system and calling for a more democratic outlook for home and infrastructure building. Over 60 organisations and individuals have come together to call on the Government to ensure that people are placed back at the heart of the planning system, led by charity the Town and Country Planning Association (TCPA) and supported by environmental and disability rights organisations, professional bodies, housing associations and community groups. The manifesto represents the views of a broad cross sector coalition of organisations and individuals who share a common belief in the value of planning to improve the quality of lives and the condition of communities, according to TCPA chief executive Kate Henderson. ‘We believe that a powerful and democratic planning system can help ensure the delivery of decent healthcare, schools, jobs, public transport and affordable homes which are accessible and have enough space for kids to play,’ she said. ‘These are things that all sections of society should be able to enjoy as a matter of course, regardless of where they live or their ability to pay. However, the planning system as we knew it is being continually undermined and devalued though significant reforms and deregulation,’ she explained. ‘Over the last 30 years the reputation of planning has declined and it has lost all sense of the progressive social values that once lay at its core. This is partly because it lost sight of any vision that connected with people's real lives and partly because planning regulation was seen as a brake on the free market. We know this is wrong: the countries that are creating great places have strong planning systems,’ she pointed out. ‘That is why we have brought together organisations and individuals who are determined to ensure that planning shapes the kind of places that this nation deserves. Planning must change so it is genuinely focused on people's needs. Our objective is to reinvent creative social town planning which did so much to lay the foundation of a civilised Britain,’ she added. The manifesto says that the Government should give councils back power over permitted development, rebalance the National Planning Policy Framework to ensure that outcomes for people are just as important as the needs of land owners and developers, and restore a comprehensive framework of place making standards for housing including mandatory minimum standards for accessibility and space. It also says that local Government should adopt a strong social dimension to local plans. This means shaping policy that prioritises place making, providing for the full range of hard and soft infrastructure, and ensuring social and affordable homes receive the highest priority. It also suggests that the private and third sectors should establish corporate commitment to a fair and inclusive planning system while planning professionals and academics should transform planning education to ensure planners have the right skills in community development. As… Continue reading
