Delivering Build to Rent
Delivering Build to Rent
Hazel Sharp Webb, Head of PRS & BTR Services
Movers & Shakers' Build to Rent (BTR) Forum Scotland held in Edinburgh on 11th October, in its 4th year, was the most successful yet. Building on previous Forums, and the accelerated growth we have seen over the last year, the theme for this year's Forum was 'Living with Build to Rent' - reflecting that there are now around 700 BTR homes now being occupied, and close to 5,500 in the pipeline.
I made the somewhat flippant observation at the Forum that developers seem to be focusing more on delivering amenity for cyclists over pets, despite only 6% of the population using a bike more than once a week compared to 50% owning a pet. My point was though a serious one. As an industry, we need to ensure we are delivering products for the particular renter whose needs we are seeking to fulfill. We need to make their rental property feel like home and (if they want to) make them want to stay for the long term, whether that's allowing them to decorate, hang pictures or live with their fur babies.
Enabling residents to live in a rental property as long as they like, brings me on to challenges with security of tenure, particularly under Scotland's new private residential tenancy. Being open-ended, with no fixed term, can actually make renters feel less secure, because they aren't able to confidently say they'll be guaranteed to live somewhere for at least a year, or three years, or however long. Of course, unlike some traditional private rental sector (PRS) landlords, BTR landlords are 'in it' for the long term, and want to encourage their residents to stay with them. In fact, it's one of the key benefits of BTR. The challenge is that it will take time to build that trust - for renters to understand and appreciate the difference.
Moving on from actually 'Living with Build to Rent’ to the challenges faced in getting more homes delivered in the first place. What was clear at the Forum was that there is no shortage of investors willing to support developers in accelerating delivery in Scotland. However, as was argued at the Forum, with few exceptions, local authorities in Scotland do not have a good understanding of BTR. The bureaucracy of the planning process (particularly in terms of negotiating Section 75 contributions) and securing a building warrant, continues to create otherwise avoidable obstacles to investment.
This was clearly articulated by one investor panelist who delivered a warning shot, "Scotland needs to get going or the capital will move elsewhere."
Frustratingly, whilst there was a fantastic mix of delegates at the Forum, there was little representation from those involved in Policy and/or Planning. With £millions if not £billions ready to invest, we are still not reaching or engaging the 'gatekeepers'.
Scottish Housing Minister Kevin Stewart's keynote address reiterated the Scottish Government's desire for this industry to grow quickly. He expressed a willingness to support the concept of joint ventures between investors and local authorities to deliver much needed housing for rent, and to get the message across to council leaders. He did make the point though that their lack of representation at the Forum might have had something to do with the fact that it was held on the same day as the annual COSLA conference!
Whatever the reason, the fact remains that local authorities still need to be engaged, and efforts to educate them on what makes BTR different to the traditional PRS, as well as the wider economic impact it can deliver, need to be cranked up before it's too late.
No longer can local authorities accuse the BTR sector of only 'delivering housing for yuppies'. Very few of the homes in the pipeline could be considered 'prime' or 'premium'. We are seeing more consideration being given to delivering family housing and mid-market. As one developer at the Forum put it, "BTR is about providing housing for 'the forgotten majority' - those who do not qualify for social rent but who do not want or cannot afford home ownership, and are being squeezed by rapidly rising PRS rents."
Homes for Scotland recently calculated that each house built in Scotland creates around four jobs. The existing BTR pipeline could contribute around 25,000 jobs, but this could be doubled if we were to increase BTR delivery in proportion with the rest of the UK.
Local authorities cannot risk shooting themselves in the foot and doing a real disservice to the communities they are meant to serve.
This article first appeared in the October 2018 issue of Scottish Property Voice. Click to read the full issue: https://www.scottishpropertyfederation.org.uk/sites/default/files/attachments/VOICEOCT18FINAL.pdf