At Forsters we have a large and dynamic real estate team, with a deep knowledge and understanding of the lifecycle of the Build to Rent (BTR) product. Engaging lawyers who understand the market as well as the most effective ways to structure deals and avoid pitfalls, will secure the value of your development and investment.
We provide straightforward and smart advice, tailored to your business goals. We understand that need to drive deals over the line, finding solutions as needed.
The Build to Rent Sector
Build to Rent (BTR) is part of the wider private rented sector (PRS) market. In planning terms it is part of the Use Class known as C3 which also covers for sale residential product.
BTR is a relatively nascent sector, taking off after the Montagu Report in 2012. In contrast to the more traditional PRS market, which tends to be made up of an older housing stock, BTR offers a new build, premium product with high ESG credentials, aimed at both younger renters and people with families.
BTR has become a key part of addressing the acute housing need in the UK. In total over 250,000 units are completed or in the pipeline (under construction or in planning).
The sector is not without its challenges, particularly on the regulatory side, for example potential market rental reform including the abolition of section 21 notices - which effectively waves goodbye to fixed term assured shorthold tenancies. Despite this change, which is expected to be enacted before the next Parliament, investors seem comfortable that they will be able to operate successfully in any new rental environment by offering rents linked to inflation and offering rolling tenancies.
Development remains challenging – the planning process is fraught with delay and complexity around affordable housing requirements and viability. Two recently announced consultations relating to the forthcoming Levelling Up and Regeneration Bill, focus on making local plans simpler and faster to prepare, and on introducing new permitted development rights to allow hotels to change use to C3 – however as BTR product is new build, it is difficult to see how this will assist supply. Michael Gove, the Secretary of State for DLUHC, has also announced continued protection for the Green Belt, sticking by the government’s move away from “top down” housing targets.
Developers are also now grappling with Building Safety Act measures including second staircasing requirements on new tall (18 m) residential buildings, together with general market conditions.
Despite these challenges, and supply side issues which kick up cost, there is sustained interest from both existing and new investors in this sector. High demand for product, and challenges in the private for sale market are just a couple of reasons, despite current market sentiment that we can expect the home ownership market to benefit from some more government incentives on the demand side (for example SDLT holidays, a new version of help to buy).
Forward funding/commitment opportunities are the most common way of funding development, and we are now also seeing sale of stabilised assets and purchases of bulk units from the private for sale market as housebuilders offload stock.
Please click here for Helen's recent post in relation to a BTR specific planning use class.
What we advise on
- Development and forward funding of schemes.
- Structuring of platforms for operation of schemes including propco/opco models.
- Planning advice from application stage through to complex Section 106 Agreements which often include viability testing and review.
- Tax advice including efficient structuring to mitigate risk in BTR schemes.
- Golden brick disposals to affordable housing providers in relation to the required affordable housing element of a scheme.
- Construction advice including the more traditional design and build model alongside construction management packages and investor protection via warranties and latent defects policies.
- Buying and selling of stabilised assets.
BTR at a glance - helping you get to grips with the terminology and key concepts behind this rapidly evolving market.
Forsters has advised specialist Build to Rent and student accommodation developer HG Living on a development and funding agreement in respect of a 306 unit residential scheme at Bowback House Milton Keynes.
On our latest More Than Law podcast, host Miri Stickland is joined by three members of our Build to Rent group who provide their insights into the sector.
Podcast host, Miri Stickland, talks to Construction partner Andrew Parker, associate Dan Cudlipp and Property Litigation associate Sarah Heatley about the findings and recommendations so far from the ongoing Grenfell inquiry, new legislation coming forward in the form of the Building Safety Bill, practical issues being encountered on sales and refinancings of high-rise residential units and what options may be available to cover the costs of any remediation works required.
Scotland and England have vowed to bring in rent controls and mayors in England are lobbying for the same power.
What impact will Leasehold Reform Act have? Head of Build To Rent, Helen Streeton, writes for Property Week
We anticipate that the Leasehold Reform (Ground Rent) Act 2022 – now law but not yet in force – will be triggered and brought into force within the next six months. Effectively, this abolishes the ability to charge ground rents where developers are selling flats or houses on long leases.
31st October 2019 was not necessarily as auspicious as expected by many, but it was a day of discussion on build to rent at the UKAA annual conference.
On 4 July, representatives from arguably the majority of the UK’s Build to Rent sector assembled at the offices of Ashurst for a roundtable to discuss “Beyond the Hype: The Real Importance of Wellness in the BTR Sector”. Here are some thoughts on a wide ranging discussion (held under Chatham House Rules).
Weren't at the BTR Annual Bisnow Conference? Here’s what you need to know.