Two high-profile, amenity-rich build-to-rent developments have opened their doors in Yorkshire recently. Moda Living’s luxurious New York Square is now taking reservations and Grainger’s Pin Yard is also proving popular with renters in Leeds. The build-to-rent sector’s emphasis on communal facilities, which offer the chance to socialise and build friendships, are the main lure and while apartments in these schemes cost more than the average rental flat, that they are fulfilling a need is beyond doubt.
Here Sam Verity, an associate at Allsop, Leeds, which specialises in giving investment and development advice on build- to-rent prospects, gives us the lowdown on the Yorkshire build-to-rent market:
The Yorkshire build-to-rent market has been a little slower to get going compared to its neighbours in Lancashire and the Midlands. Despite that, it has come into its own over the last 18 months. With nine schemes already up and running and a further nine under construction, the region is poised to become a build-to-rent hotspot in the next couple of years.
Yorkshire’s two largest cities, Leeds and Sheffield, have both seen high volumes of build-to-rent investment over the past few years. Leeds, with its regeneration, buoyant employment market, available land and robust pricing, is among the top locations on investors’ target lists.
Sheffield is also very desirable, although lower pricing and rising construction costs have made it difficult for newcomers to enter this market. Nevertheless, transactions involving insurance giant L&G and property developer Ridgeback have demonstrated the persisting appeal of the Steel City.
Even though build-to-rent is still in its infancy in the UK it has already branched out into two distinct strands. These are single family housing within suburban locations and multi-family city centre apartment schemes
Leeds is the centre of multi-family build-to-rent activity in the region, driven by huge appetite from investors and residents. The city has been suffering from persistent under delivery of residential property since the mid-2000s, which helps explain the thirst for new homes. Since 2014 over 3.3 million sq ft of office accommodation has been built, which, coupled with substantial investment into the city’s infrastructure, has helped attract blue chip employers, swelling the number of working professionals in the city.
With the proliferation of private-built student accommodation in the city centre, a new cohort of tenants has emerged. These are graduates who want to continue enjoying high-quality city centre living after leaving university. These factors combined with the shortage of housing stock have created strong demand for build-to-rent, resulting in stable returns and occupation security for investors.
Multi-family build-to-rent residents are typically between 23 and 35 years old, and location, amenities and hassle-free maintenance are key. In the aftermath of Covid, there has been a bigger focus on the provision of shared amenities, such as co-working spaces and outdoor terraces, as well as apps through which residents can find out about activities in their building, helping create more cohesive communities.
Single-family build-to-rent housing is one of the fastest growing sectors within the UK property market and saw significant investment throughout 2021, with over £400m deployed and billions lined up. Single family schemes usually comprise between 75 and 400 houses can be standalone developments or a proportion of a wider, mixed tenure project.
We are now seeing numerous single family rental schemes emerge in towns such as Doncaster, Pontefract, Barnsley, and Wakefield. These are already strong rental locations due to their employment opportunities, proximity to larger employment hubs and strong transport connections. Commuter areas of Sheffield and Leeds are also seen as attractive locations.
As people grow older and their lifestyles change, so do their accommodation requirements: larger properties with private outdoor space become more desirable. Other aspects, such as proximity to local amenities, employment hubs, schools, and strong transport links remain just as important.
Single family housing offers accommodation of similar quality to city-centre developments but in more family-orientated suburban locations. With affordability being the main barrier to home ownership, this type of build-to-rent property allows residents to enjoy high-quality living and more space without the need for a substantial deposit.
The option of longer-term tenancies, typically, three years plus, provides security, enabling residents to stay in school catchment areas in a settled community and put down roots. Despite being in high demand across the UK, single family housing remains a small part of the UK build-to-rent market, making it an area with enormous growth potential.
Investors are attracted to the low-risk characteristics of housing and in return get excellent occupancy rates with low voids, constant rental growth, with lower capital and operational costs.
The build-to-rent market is still in its infancy but is growing at a fast rate, appealing to both UK and overseas investors chasing stable returns with strong environmental and social characteristics.
As for the future of build to rent in Yorkshire, Sam Verity of allsop.co.uk says: “Unlike some other property types, it has been remarkably robust even through the toughest of times, with rent collection and occupancy rates among the highest in the property sector. There is every reason to believe that Yorkshire will see greater volumes of high-quality housing stock over the coming years, offering customers an ever-wider selection of homes to choose from.”