As Fred Bristol’s recent column suggests the evolving UK build-to-rent sector retains a strong pull for investors.

Deepa Deb Rattray BLP

Rented living is a conscious life choice for millions of Britons, and these tenants want easy access to good quality and accountable property managers. They also demand lifestyle amenities close by and properties designed to the highest specification. Build to rent homes are designed to meet these demands, incorporating modern 21st century design, private and communal living spaces - and even luxury extras such as built-in gyms.

But while tenants get a home, investors get an asset with greater investment longevity.

Challenges remain, however, including picking the right locations based on who the target tenant is; for instance, the nature of the local area and the existing local stock which is the competition are key factors to consider. This will determine whether there is long-term demand which in turn will determine the level of rent charged.

What do tenants want?

Equally, there is the issue of how to design a rented product to cater for a range of different types of tenants. There appears to be little UK-wide understanding about what different tenants want from a bespoke private-rented product, and how that relates to the costs of development, costs of management and rent levels. For instance, what amenities do tenants look for as standard, and what additional services will tenants pay a premium for?

Grainger Salford PRS

Grainger’s new Salford PRS scheme brings a range of amenities - Source: Grainger to acquire PRS scheme in Salford

The Mayor of London’s Supplementary Planning Guidance (SPG) is specifically aimed at streamlining the process for getting new homes built that meet that “genuinely affordable” definition. Although this may impact viability of build to rent as it does not appear to recognise the need for flexibility around the term’s true definition.

Yet many of the challenges can be overcome in time as the UK build to rent sector matures and its cost base becomes more clear.

Whilst a question remains as to whether build to rent can generate a level of return that is attractive to different kinds of investors and where in the country attractive returns can be found, overall the message is clear: there is continued support for build to rent becoming an established asset class in its own right in the UK.

Deepa Deb-Rattray, partner, Berwin Leighton Paisner