The last “gold rush” in Leeds city centre was during the decade-long property boom that preceded the 2008 global economic crisis.About 10,000 flats were built for sale and city living was born, creating a vibrant core that has helped make Leeds one of the most sought-after and economically successful places in the UK.Few homes have been constructed in the city centre since those heady, high rise days but that is set to change thanks to build-to-rent. There are now 2,579 rental only flats in the construction pipeline with predictions of another 2,500 to come.The first big scheme to complete will be 744 apartments by Dandara at Sweet Street and Manor Road, which are scheduled for occupation from late summer this year.
In the pipeline
Other sites with planning permission for large, amenity -rich rental only schemes include SOYO at Quarry Hill, where Moda Living is building 515 apartments; 202 flats on the site of the former Yorkshire Post building on Wellington Street; 259 units on Belle Vue Road; 250 on the Granary Wharf car park in Holbeck and 607 flats on the former Doncaster Monkbridge Works site on Whitehall Road.Graham Bates, founder of BTR Capital Partners and LIV Group, specialises in build-to-rent consultancy, funding and management and predicts that Leeds can comfortably accommodate 5,000 apartments in these purpose-built blocks.His latest mission is to find a funding partner for the Doncaster Monkbridge site, pictured above, which is being developed by BAM Properties and is pictured above.. Construction is set to start in January 2020 with the first residents moving in by May 2022 and he doesn’t foresee problems finding investment.Institutional investors, such as insurance firms and pension funds, are piling money into the sector and see it as a safe place to make a steady return.
The developments are popular in America where they include communal lounges, gyms, laundries and shared gardens. While rents are about 20 per cent more than the average flat, tenants have amenities and better security of tenure.This business model has already changed the lettings landscape in nearby Manchester and Leeds is seen as the next obvious target for the funds with multi-millions to invest.The BAM Properties scheme will have 463 apartments arranged in a 17 storey block and 21 storey building connected by gardens. It also has rooftop lounges and gardens, a wellness centre plus co-working space.The site is part of Latitude, a mixed-use development adjacent to the new HMRC Government Hub at Wellington Place, where more than 6,000 staff will relocate in 2020.Martin Hill, Development Director for BAM Properties, says it will be a “Best in Class” project and Graham Bates agrees: “In the past, developers threw up buildings with little thought as to how people live, whereas with best-of-breed build-to-rent developments, such as the BAM scheme, we have spent time looking at the apartment design and specification with a focus on how residents will live. We have incorporated substantial amenity so residents can socialise and have a change of scene from their own four walls.”
Future of build-to-sell
It sounds impressive but begs the question: what is the future for building to sell in the city centre? This market was previously fuelled by buy-to-let landlords and those who wanted to “buy-to-live”.“I doubt we will see more than a handful of schemes with apartments for sale coming forward in the next few years,” says Graham. “The buy-to-let market is now much less attractive to investors and it is difficult to fund a development with flats for sale. With such a strong trend for city workers to rent and the appetite from institutional owners to invest, the future is going to be about build-to-rent.”Jonathan Morgan, who helped pioneer city living in Leeds via Morgans estate and letting agency, says build-to-rent schemes will fulfil a need but has reservations about whether they will achieve premium rents.“In Manchester, a two-bedroom flat in a new build-to-rent scheme can fetch £1,200 a month. In Leeds, the average two-bedroom flat is now £890. Time will tell whether people will pay that kind of uplift as there is no evidence yet that extra amenities are of value to tenants.”He also has concerns about too many top-end apartments to let, which will exclude key workers. He believes that the council should build affordable rental flats in the city core using money paid to it by developers as part of the section 106 planning agreements.As for build-to- sell, he says Leeds is the only major city centre without a large residential scheme with flats for sale.“It’s about perceived risk and value. In fact, Leeds city centre is undervalued and if someone built a premium apartment scheme with flats to sell, there would be buyers.”