When Build to Rent (BTR) properties launched in the UK, the primary residents were envisaged to be couples, individuals or small families. What has transpired however has been quite different, with some schemes seeing as many as 60% of residents being sharers and in completed BTR homes in London, sharers making up the highest percentage of households.
In completed BTR homes in London, sharers account for 38% of households, with couples a close second (33%). It is often thought that single householders dominate BTR occupation but only 17% are renting on their own. Comparatively, 26% of renters in the whole private rental sector (PRS) are sharing, indicating that BTR is a good fit for the sharer demographic.
Encouragingly, operators have not reported any undue problems with sharers renting, with the preconceptions of sharers being ‘party animals’ or likely to end tenancies early, proving to be unfounded. As demographics have shifted and buying a home has become less realistic for most people under the age of 30, today’s sharers in urban areas are more likely to be professionals in the 25-35 age bracket.
What is remarkable about the high number of sharers currently living in BTR homes is that one of the criticisms of the sector from the outside has been a perceived lack of affordability. Again though, the reality does not match the perception. When assessing against the affordability benchmark of 30% of household income spent on housing costs, couples (27.4%) and sharers (28.9%) are below the 30% mark and families (34.7%) and singles (32.4%) are just above it. When compared with living in the wider PRS, it is actually more affordable for sharers to live in a BTR home, with the average sharer spending 30.2% of their income living in the PRS.
This data is useful, as BTR is thought of as a luxury product, out of the reach of sharers. In fact, the sector is comparable in affordability to the wider PRS.
Impact on the Community
These findings have implications for operators and how they market their schemes through lease up phase as not only are a high percentage of their residents already sharers but there is a huge pool of potential residents currently untapped by their marketing.
Thought should also be given by operators as to how and where their schemes are marketed. Whereas portals such as Rightmove and Zoopla bring in couples and families, dedicated sharer platforms should also be utilised in order to tap into the growing sharer demographic and maximise the speed of leasing up new schemes. Sharer platforms can also assist in stabilised phases of schemes to help existing residents find new people to live with if one person in a group decides to move out but the other tenants want to continue living at the development.
Thought should also be given by BTR planners in the pre-build phase as equal sized bedrooms and bathrooms are important features for sharers and can save disputes or awkward conversations at the move in phase.
Impact on the Customer
The type of tenancy offered by developers could also be looked at, with some operators now running feasibility studies into the value of offering room only tenancies. Could yields be higher if the opportunity was offered of sharers being able to take out a room only tenancy in a 3 bed flat?