Smart renting: US import build to rent is taking over London with most new flats in east London
A third of households in London are renting — a level expected to jump to 40 per cent by 2028. The capital clearly reflects what is fast becoming a national trend.
Renting was once the preserve of students, twenty-something sharers or low-income workers consigned to substandard flats.
Now the number of private rented households with children in England has risen 175 per cent in 10 years and there are 56 per cent more tenants aged over 65.
“The private rental sector is growing in London, with some boroughs now seeing close to half of households renting rather than owning. We’re seeing a range of new rental accommodation on offer — schemes that suit young professionals, growing families and retirees,” says Savills’ Lawrence Bowles.
The combination of strict mortgage lending, lack of affordability and shift in mindset from security to flexibility has driven this surge in renting, explains CBRE’s Jennet Siebrits.
But while government has picked on small private landlords by slapping a three per cent stamp duty surcharge on the purchase of second homes and scrapping interest rate relief on buy to let mortgages, it’s far more supportive of build to rent.
These blocks are being hailed as a solution to the supply crisis, with Transport for London claiming such schemes can help deliver homes for Londoners “at pace”.
TfL this month chose Grainger to develop 3,000 rental homes on 10 Tube network sites, including Argo Apartments in Canning Town and schemes in Ealing and Nine Elms.
Argo Apartments: rental homes on the Tube in Canning Town
Foundations for change?
There are now 15,393 build to rent homes across Greater London with another 10,623 under construction.
The greatest pipeline is in Newham, CBRE research shows, with 2,794 units completed, mostly at the former Olympic Village site, East Village, now a rental district run by Get Living.
A US import, build to rent schemes have professional landlords and are backed by institutional investors such as pension funds.
They began to appear in central London in 2009, often with concierge, gym, pools and spas, designed with high-earning millennials and professionals in mind. But the £2.6 billion sector is evolving. There’s a recognition that infinity pools and cinema clubs are not must-haves in a rental complex.
Top 10 London boroughs for renting
So which pockets of London have the most rental homes at the best prices?
New research exclusive to Homes & Property names Newham as the best borough for renting.
The CBRE study looks at the highest number of build to rent units completed this year, combined with the highest number of private rental homes on offer and the most affordable rents.
The most affordable boroughs have an average monthly rent of less than £1,350 compared with a London average of £2,110. Croydon, Tower Hamlets, Brent and Barnet complete the top five rental hotspots.
|London borough||Average rent PCM|
Source: CBRE. Based on availability of rental property, the number of new rental homes completed and rental rates
For Bricklane’s Simon Heawood, a growing pipeline of more affordable rental stock spread across Greater London will encourage people to choose renting as a first option rather than a “plan to buying”.
Affordable rents, family-size units and longer-term letting agreements are the industry’s new priorities. Some corporate landlords, including Essential Living and Grainger, combine service charge and rent. The former offers three-year tenancies at Dressage Court in Bethnal Green, for stability (0800 2100 200).
Schemes are springing up on London’s peripheries where land is cheaper, enabling more affordable rents.
In Hayes, Material Store at The Old Vinyl Factory has 189 flats, including 26 triplexes, plus a children’s playground and communal terraces. Through Fizzy Living, rentals at the site start at £1,260 a month (fizzyliving.com).
The UK’s tallest build to rent tower is 729ft Newfoundland in Canary Wharf, now under construction. The 636 private rented flats will be run by corporate landlord Vertus Group.
Under construction: the UK’s tallest build to rent tower, Newfoundland
Renting is not always a choice. The first-time buyer in London had to put down a deposit of £96,000 in the year to June, up 43 per cent from the deposit in 2014, Savills data shows.
“Home ownership in London is increasingly being restricted to more affluent, high-earning buyers. High house price growth and stricter mortgage rules are confining even better-off households to the private rented sector,” says Lawrence Bowles.
But more people are also opting to rent. “The reasons are complex,” says Simon Heawood, founder of property investment firm, Bricklane.
“Many highlight flexibility and convenience that come with renting. Choosing to rent can mean living in a more central location in a better property, rather than buying a less-desirable home in a distant location.”
In five years the proportion of rented London households with children has grown from 28 per cent to 35 per cent.
“We have seen a boom in the rental market for families,” says Brendan Wynne of estate agents Featherstone Leigh. New Garden Quarter in Stratford E15 has family flats, long-term lets, secure video entry and two acres of gardens.
A three-bedroom, two-bathroom home is available to rent through JLL for £2,540 per month. Call 020 3553 6811.
For families who prefer a standalone period home, Featherstone Leigh has listed Linden House in Brentford, with a large courtyard garden, four bedrooms, three reception rooms and a kitchen-diner with vaulted ceilings, for £3,250 per month (020 8940 7676).
Rental blocks designed for families are also being built in the home counties. Institutional investor M&G is funding The Green at Kilnwood Vale near Horsham, Sussex, with three-bed townhouses, sports pitches and a clubhouse. Call 0333 210 0043.
Over-65s appear to be finding renting a more economical option when they choose a new lifestyle.
“Some of the growth in older renters may be from silver splitters — older divorcees,” says Lawrence Bowles.
“Many of these households have enjoyed 70 per cent house price growth over the last 10 years, but have difficulty finding properties using just half that equity.
From £480 a week: flats at Sailmakers in Canary Wharf, a build to rent complex with concierge, cinema and on-site parking
“Renting offers them the chance to live nearer the amenities of the city centre without needing to pay stamp duty, and retain the flexibility to move into purpose-built retirement accommodation later on in their lives should they want to,” he explains.
The Canary Wharf estate’s growing residential area is attracting retired renters with its 300 shops, bars, restaurants and arts events.
There will be 300 rental flats in the Sailmakers complex, with gym, concierge, on-site parking, a cinema and a dry cleaning service.
One-bedroom flats start at £480-£575 a week, with four weeks rent free at the start of the tenancy on a 12-month lease. Call 020 7519 5939.