Build-to-Rent Projects

Build to Rent (BTR) is growing exponentially in the UK as Developers and Corporate Companies fill the gap in the market. More and more tenants are looking for quality properties that meet their requirements, energy efficiency, high-speed internet, onsite co-working spaces, gym, and concierge services.

The UK’s continuing lack of supply of quality housing against a growing population and number of households means that property rentals and prices will continue to increase making the property investment market a lucrative investment.

BTR Investment opportunities can be made in different ways depending on the amount of investment. Investors can purchase single or multiple units in a specific BTR development that often come with guaranteed rental income for a fixed period of time. The properties are fully managed making it a very hands-off investment.

Another option is to invest in a whole development, or part of a development as a BTR Project. This works whereby the developer is looking for an investor to forward purchase a development or part of the development. The investor will agree to purchase a certain amount and type of units at the planning stage (Off-plan investment), at a discount that when built and completed the investor will then put on the rental market.

It is important to note that Magnate has options for both single, multiple units and whole or partial developments. If this is of interest to you then please register your interest on this page and will facilitate contact with the developers and their representatives.

You can book an appointment here with Keith Egan to discuss your requirements.


What is the UK’s Build to Rent Property Investment Opportunity?

If you are looking for a higher return on your investments in 2023 then the UK's Build to Rent sector is worth researching and looking at the opportunities. The benefits of investing in Build to Rent market have over the past 5 years become increasingly evident. These opportunities offer a greater potential return than secondary stock and provide investors with more security and a diversified portfolio.

In this article, we explore why Build to Rent (BTR) investments offer more robust returns than investing in secondary stock (pre-owned properties). If after reading this article you want to discuss this further why not speak with our Managing Director, Keith Egan for further information? Click here to make an appointment now!


Build to Rent vs Secondary Stock

Build to Rent investments offer a great option for investors to maximise their return on investment. BTR investments require less time to manage as the properties are designed and built to meet the latest industry standards and have warranties in place, such as the 10-year builders guarantee which means property investors don't have to take care of repairs and maintenance as they would with secondary stock.

On top of this tenants are always looking for ways to reduce their outgoings and energy efficient properties will see an ever-increasing demand. BTR Projects are a great way for investors to capitalise on this trend as are designed and built with energy-efficiency in mind.

BTR projects are also designed with the rental market in mind, and they include highly desirable facilities onsite, including gyms, concierge, shared working spaces and high-speed Wi-Fi. These developments support the hybrid working patterns of the younger tenants.

With rental yields traditionally higher than those of other investment types, BTR investments can provide a strong return on investment for investors looking to make long-term investments.

In addition to this, the removal of tax efficiencies for repairs on rental properties for investors has removed any incentives for investors to buy and renovate older buildings. This makes new developments far more financially appealing. Compared to secondary stock, BTR investments are an excellent option for investors looking to get the most return on their investment.


Why are BTR properties a good investment?

Build to Rent (BTR) properties have become more popular with investors as opposed to buying secondary stock. Investing in BTR provides a number of benefits that makes the process easier and more profitable for investors. The most attractive feature is that extensive renovations or modifications are not required. As with all new builds, the properties are brand new and come with various assurances. This make the process of finding tenants a lot easier as the properties are far more desirable.

Overall, BTR investments are an excellent way for investors to increase their returns without worrying about additional costs associated with older properties. Additionally, the fully managed nature of BTR ensures that any unforeseen issues with the property can be taken care of quickly, giving investors peace of mind that their investment is secure.


Key Statistics

  • New build properties are more energy efficient, attracting a higher tenant demand due to the rising cost of living.
  • 5-year UK average BTR rental forecast is at +22.8% vs +15.9% for traditional stock (JLL).
  • £102bn will be invested into the UK Build-to-Rent sector by 2028 (Knight Frank).
  • £3.2 billion of capital being committed to the sector during the first nine months of 2022 (Knight Frank).
  • As the government drops its commitment to building 300,000 new homes per year, private investment is needed now more than ever.


What are the risks associated with BTR?

When investing in BTR properties, as always with any investment there are certain risks. Like any investment it is important to do your research and buy through a reputable developer.

Investors must consider the legal implications of the purchase for example if you are buying off plan. It's also important to make sure you understand the tax implications of property investment.

Investors must also consider the construction process and its risks as development projects can take longer than expected. This will delay getting a return from the investment.

The quality of the construction can be a risk – ensuring that the developer has a track record of delivering quality projects that meet the building regulations is important.

Investors should also carefully review the market trends and demand for rental properties in the surrounding area of the development. An oversupply can lead to lower rental yields, affecting the return on the investment. Also make sure you research what the future holds in the area, what is the planned redevelopment investments, the forecasted rise in employment, the population, and the demographics. Many forecasts are available from Real Estate research companies.  

Investors need to make sure that their properties are managed properly. Having a good management agent will ensure that all paperwork is kept up-to-date and that tenants are managed properly. Poor management can lead to disputes between landlords and tenants and damage the investment. Click here to see our information on managing your properties.

Investing in BTR property provides the opportunity to make a good return on your investment. As always it is important to do your due diligence before you invest. Ensure that you understand the legal implications, potential development risks, local market trends and management of the property to protect your investment.


How can I make money from BTR?

BTR property investments are becoming increasingly popular in recent years with many corporate companies now entering the market. For example, Lloyds Banking group now has a division focussed solely on BTR Developments to grow an asset base that will generate income. John Lewis Partnership (Who own Waitrose) are now redeveloping their unused real estate sites into BTR developments to generate income.  

This is because these developments offer investors a strong return on their investment. With the right advice and portfolio diversification, investors can make a healthy return from investing in BTR properties.

The main benefit of investing in BTR is that there is often a rental assurance in place when investing through a fully managed option. This is where developers are offering a rental income guarantee for a fixed period with a minimum net yield. One such development is the Co-Living project by Beech Holdings in Manchester, click here for more information. This development is good for investors looking to make a single property investment or bulk purchase of units.

With this option investors know that their investment will be secure, and they will receive an income from their property even when there are times of uncertainty. BTR can be used for both short-term and long-term leasing, allowing investors to have flexibility with their investments.

Another benefit is that new BTR property has the potential to increase in value over time, as well as generate consistent rental income. When looking at BTR investments, it is always a good idea best to seek advice from a specialist. Magnate Assets provide free an impartial advice and can advise you on the best options depending on your investment requirements.

Magnate is continually reviewing the UK Property market and engaging with developers to find the most attractive options. We also negotiate on behalf of our clients’ specific incentives and discounts for overseas investors, including those based in the Middle East.


Are there any other benefits of investing in BTR stock?

Generally, BTR properties are fully managed with no additional work required from the investor. This means that investors don't need to worry about finding tenants, collecting rent, or maintaining their property.

Additionally, BTR projects are built on premium land in prime UK towns and cities. This means that investors are buying apartments in the best sought-after locations, offering greater potential for capital growth.

There is a growing undersupply of rental homes that is pushing rents higher, and this means increasing returns for investors in the long term.

It is always important to remember that any investment is not without risk. Investors should make that they do their own due diligence and feel comfortable with the risks associated with a BTR investment.

With the right research and understanding of the potential benefits, investing in BTR property can make an attractive option for investors who are looking for higher returns in the year ahead and beyond.

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