The biggest build-to-rent scheme in Leeds is about to open with flats for keyworkers. Sharon Dale reports on the rise of co-living developments.
The first large-scale build-to-rent development in Leeds is nearing completion and heralds the dawn of a new era that could deliver an extra 5,000 rental flats to the city centre in the next four years. Clarendon Quarter, on St John’s Road, opens on January 7 with 261 studio apartments offered at a reduced rent for keyworkers, including nurses and those employed in retail, who earn under £30,000 a year. Phase two of the scheme, which is a conversion of St Michael’s Catholic College with some new build, will see 61 one, two and three-bedroom apartments ready for open market rental at the end of February. The site, owned by American insurance giant AIG, brings the concept of co-living to Yorkshire. It is already popular on the continent and in the US, where build-to-rent schemes include concierges, communal lounges, gyms, laundries, shared gardens and other amenities. The sociability is enhanced by better security of tenure as big investors are in it for the long term and want steady returns in the form of rental yield. There is little doubt that they will transform the lettings landscape in British cities. London has a number of build-to-rent developments and Manchester also has schemes coming out of the ground. Leeds has lagged behind its North West neighbour but institutional investors, such as insurance firms and pension funds, have spotted the city’s potential. This week, Grainger PLC submitted a planning application to turn the old Yorkshire Post newspapers site on Wellington Street into an 18 storey tower with 237 rental apartments. Moda Living, born out of Yorkshire construction firm Caddick, is forging ahead with plans to build 705 apartments at Quarry Hill. It should be on site early next year with the first homes ready to rent by 2019. Other potential investors are in talks with landowners and construction companies. Graham Bates, CEO of Leeds-based LIV Group, specialises in strategic advice and management for build-to-rent schemes. He is working with AIG on Clarendon Quarter and is involved with a number of similar projects across the country. Earlier this year, he predicted that there would be 3,500 build-to-rent apartments in and around Leeds city centre within the next three to four years. He has now revised that figure to 5,000 given the number of sites now being considered. “By this time next year we will see at least another two or three sites being developed by major UK institutions,” says Graham. “The demand for this type of rental property is there. Young people want to live and work in the city centre and they are staying for longer. They want better facilities and the chance to socialise, which co-living apartments offer.” There are still challenges for those looking to build new high-rise blocks. Land is available but some of it is seen as too costly and the price of construction has increased. “The numbers have to add up as these are not hugely profitable developments. Gone are the days when a developer could make 20 to 25 per cent on their capital investment,” says Graham.
Rents are up to 20 per cent higher in the amenity-rich schemes compared to the average buy-to-let flat. Clarendon Quarter’s studio flats are for keyworkers and start from £525 per month, a discount on the going rate of £650. The compact studio flats range from about 280sq ft to 531sq ft. but good design helps mitigate the lack of space. There is storage everywhere, including an abundance of drawers and cupboards. In contrast, the communal areas are huge with lounges on every floor featuring comfy sofas, chairs, workbenches, fires and TVs. There’s a quiet room, a reading area and a basement meeting hub with a big screen for movie nights. The lower ground floor is also home to a gym, yoga room and post room. For those keen to make friends or find a soulmate, the industrial size laundry is just the place. The long row of ironing boards offers a chance to chat while pressing the creases into their work trousers. “This kind of co-living appeals to those who like the idea of socialising while still having their own space to retreat to. The concept is you sleep and cook in your apartment and live in the building,” says Graham, who adds that, in time, investors may look at large, build-to-rent schemes in other Yorkshire cities, such as Sheffield and York.