With Build to Rent the fastest-growing trend in the rental sector, Property Investor Today took the opportunity to visit one of London’s biggest developments – Landsby by Tipi – to find out more about this burgeoning phenomenon and whether it can be the answer to the capital’s (and the country’s) current housing crisis.
It’s hard to argue much with the assertion that Build to Rent is the biggest trend in the private rented sector right now. The rapidly growing sector sees purpose-built, professionally managed rental developments – often luxury, often with add-ons – constructed with tenants specifically in mind.
Large-scale institutional investors – such as big City firms and pension and insurance funds - are the main organisations ploughing money into Build to Rent, with Legal & General and M&G leading the charge. Property companies such as Grainger plc, US giant Greystar and British developer Quintain have also invested heavily in a growing movement, which often sees developers, investors, residential management firms, professional landlords and architects collaborating to ensure a joined-up approach from pre-planning to construction, through to completion.
Across our lettings-based publications, we’ve seen a significant growth in the number of stories focusing on Build to Rent. Our recent roundup highlighted further activity and tie-ups across the country, while a £100 million-plus deal for another 250 BTR homes in London was recently announced by Telford Homes, Greystar and investment platform Henderson Park.
A company fit for the times
Quintain, founded in 1992 and responsible for the dramatic transformation of Wembley Park in recent years, is behind Build to Rent brand Tipi, which has been making a big splash in North West London recently.
If you regularly travel by Tube, you may have seen Tipi’s distinctive and provocative revolutionary-style adverts adorning the walls of stations and carriages, asking people to join the rental rebellion.
Tipi, described as a ‘lifestyle-led rental company’, manages Quintain’s sizeable, ever-growing Build to Rent portfolio. It already has 500 completed homes across a number of developments close to Wembley Stadium, with 5,000 more in the pipeline. Currently, Tipi operates 140 apartments in the Montana & Dakota buildings and 120 ‘chic, modern apartments for rent’ in its Alto building.
The most recent development, which opened in September 2018, is its biggest to date. Landsby, named after the Danish word for village, is made up of 295 apartments with relaxed, Scandi-led interior design. Samsung and John Lewis were involved in the design of the apartments, the recently opened Boxpark Wembley (a joint £10 million venture with Quntain) is right on the doorstep and pets are allowed for the first time in a select section of the building (as long as they’re well-behaved!).
Today, we’re being shown around Landsby and the wider Wembley Park area by Harriet Pask, head of corporate communications at Quintain. The designated meeting point is the top of the steps at Wembley Park station, which offers a fine panorama of the surrounding area. As well as the home of football (iconic arch and all) and the SSE Arena, the area has been boosted in the last decade by the arrival of London Designer Outlet, a slick, open-air shopping centre with a host of designer, chain and independent stores.
In December 2018, it was joined by the latest incarnation of Boxpark. Following in the footsteps of Croydon and Shoreditch, Boxpark Wembley is the pop-up’s biggest location to date. If you’ve not been before, it’s a foodie’s paradise filled with eating and drinking opportunities. The slogan EAT. DRINK. PLAY is pretty accurate.
It’s the latest sign of Wembley’s incredible regeneration. Not so long ago shabby, undesirable and run-down, Wembley is fast becoming cool. And its appeal to younger generations is highlighted not only by Boxpark, but the growing number of developments popping up in the area.
The predominant sound, on a warm, crisp February day in Wembley Park, is that of building works being carried out. Everywhere you look there are either new developments already open or in the process of being built, many of which belong to Quintain and are primed for use as Build to Rent buildings. A further 750 homes are expected to be delivered in 2019 alone.
A growing sense of community
Wherever you look in Wembley Park, your eyes are met with Tipi’s revolutionary-style branding. This is the case as we make our way down Olympic Way for the first part of the tour, a whistle-stop visit of the soon-to-be-opened Troubador Wembley Park Theatre.
Previously Fountain Studios – where The X Factor was once filmed – it’s now owned by Quintain and is being transformed into a flexible 1,000-2,000 capacity venue.
The theatre is part of a number of spaces, including Brent Civic Centre, 27 affordable art studios, The Yellow (a social space for local people), Boxpark, London Designer Outlet and the SSE Arena, which is aiming to turn Wembley Park into a cultural, creative and community-led hub for Londoners.
From here, we’re taken for lunch at Boxpark – busy and buzzing for a Thursday afternoon – before heading to the Landsby development, made up of Landsby East and Landsby West. We’re shown around two different furnished show apartments (apartments can also be rented unfurnished, too), which are modern, stylish and beautifully presented.
Some might say they are a bit too perfect and pristine, but the appeal of rental homes like these – especially with the views on offer – is plain to see, even if the buildings feel a bit hollow in places.
Landsby includes two roof terraces, two podium gardens (one with a children’s play area), Sky TV, superfast broadband, on-site social events, a residents’ kitchen and a residents’ lounge, allowing people to cook, work and watch TV together.
Apartments at Landsby are priced from £1,664pcm for a one-bedroom home, £2,200 for a two-bed and £3,000 for a three-bed, with utilities and broadband included. Tenancies are flexible (with three years being the standard) and no deposit is required.
The renting demographic is very international, with an average age of between 32 and 35, slightly older than the average age for the Build to Rent movement as a whole.
“At Landsby, we wanted to give our residents the very best rental experience. That means no deposits, a wide range of tenancy lengths and, of course, outstanding homes,” Rajesh Shah, managing director of Tipi, said.
“Private renting is already the most prevalent form of tenure in London, so it's only right that renters are offered something exceptional.”
The prospect of excellent transport links to London (train times and bus times are handily displayed to residents in the foyer), shared spaces and a number of restaurants and shops on the doorstep – not to mention the arena and stadium – are making developments here increasingly popular, with Wembley thriving while still retaining its character, diversity and soul. Regeneration hasn’t yet crossed over into gentrification, as has been the case in other parts of London.
What makes a Build to Rent development different?
There are a number of features which tend to characterise a Build to Rent development. These include the absence of agency fees and deposits, an emphasis on security and putting down roots (with long-term tenancies typically on offer) and the inclusion of utilities and broadband in rent. In addition, they typically have communal or social spaces, concierge services, 24/7 support, social events, on-site maintenance teams, keyless entry and free parking.
Other possible features include games rooms, cinemas, gyms, rooftop terraces, communal gardens, curated amenities, hotel-style foyers, co-working spaces and relaxation areas.
How big is Build to Rent?
Although still a small-scale, niche part of the private rented sector, it is also one which is growing rapidly.
A scheme first launched in the autumn of 2012 by the then-Coalition government to increase the number of homes on offer in the private rented sector, it didn’t immediately catch on. By September 2014, the number of units completed, under construction or in the planning pipeline was under 40,000.
In 2013, the government introduced a £1 billion Build to Rent fund to encourage more developers to enter the sector. While the total allocation for this fund – which closed in 2016 – was never taken up, it did seem to bring the emerging market some much-needed exposure.
In recent years, activity has really ramped up. According to the most recent Build to Rent market research (Jan 2019), produced by Savills and commissioned by the British Property Federation, the sector continued to grow fast in 2018. The total number of new units completed, under construction, or in the longer term planning pipeline in the UK stood at 139,508 in the fourth quarter of 2018, up 22% on the same quarter a year before.
The number of homes completed and in planning also increased by 29% and 10% respectively.
While London previously dominated the sector, the regions have caught up, with more completed homes (14,801) than the capital (14,615). Equally, the number of units under construction in the regions is now bigger than London (24,000 vs 19,300 units).
The capital is still comfortably home to the largest number of Build to Rent developments, but places such as Manchester, Salford (where 7% of housing stock is made up by BTR units), Birmingham and Leeds have all witnessed increasing numbers of developments.
The phenomenon has gone nationwide – with developments everywhere from Cardiff and Newcastle to Glasgow, Norwich and Chelmsford – but London and the North West is hugely dominant, accounting for nearly 106,000 of the overall BTR units.
As well as Quintain, three other Build to Rent operators – L&Q, Sigma Capital and Get Living – have more than 4,000 units in the pipeline. Apache Capital, Moda Living, Fuzzy Living and Criterion Capital are other names with an interest (and significant investment) in Build to Rent.
Will it solve the housing crisis?
In a word, no - at least not in its current format. It’s currently very much targeted towards the high-end of the market – people who are willing and able to pay more than £1,600pcm for a one-bed apartment, for example – and won’t appeal to those prizing affordability.
It’s also aimed at a certain kind of tenant – one seeking a bespoke renting experience – which means it won't be for everyone.
Nonetheless, its growth has been rapid in recent years and the appetite from investors is clearly there, so Build to Rent won’t be fading into the background anytime soon.
Its role in the PRS is set to become greater in the next few years, and it could be those who embrace it in its (relative) infancy who achieve the greatest rewards.
It also taps into a growing desire, shown too by the rise in co-working, co-living and property guardianship, for flexibility, collaboration and a greater sense of community in a world that sometimes feels increasingly disconnected and individualistic.