The rental market in the UK is in the middle of a transformation that we haven’t seen for decades. Since the introduction of the 1988 Housing Act, Buy to Let (BTL) has been king in the UK.
But everything changes over time, and the BTR sector is now hot on the heels of BTL.
In the last few years, BTR has had a meteoric rise. It has gone from being non-existent at the start of the 2010s to a major player come the end of the decade.
But has BTR put BTL on the back foot? Not entirely. There’s still plenty a traditional landlord can do to set their property apart. We take a look at how the BTL market can adapt to the rise of BTR.
What is Buy to Let?
A buy to let property is a property purchased with the sole intention of renting it out, rather than with plans of living in it yourself.
Instead of being used as a home, a BTL property is seen as an investment. They generate income through monthly rent. That rent then covers the mortgage on the property, as well as other expenses such as:
Repairs & maintenance
Additional furnishings & decor
The biggest plus point of a BTL property is that it's a source of stable income. The industry has benefited heavily from the real estate market boom in the UK in recent years. Rising house prices made buy to let a highly profitable market, and in turn, a popular way to invest.
What is Build to Rent?
Build to Rent is a type of new-build apartment block, built from scratch specifically for the rental market. The units are managed by one operations company who look after the day-to-day aspects of running the property. Some of their key duties are:
Keeping tenants happy (through social events, providing services, and handling complaints)
Arranging repairs & maintenance
Ensuring the property runs at a profit
There are roughly 130,000 BTR units in the UK in operation, or in the process of being built. While still significantly lower than the number of buy to lets, it’s still a staggeringly large amount for a young industry that’s growing heavily.
One of the first examples of build to rent complexes in the UK was the 2012 Olympic village. Athletes from each country needed places to live while competing, while also having places to socialise, work out, and relax.
After the games, these complexes were sold and renovated into some of the first Build to Rent properties with cinemas and gyms included.
They represent a place for residents to build a community while having access to a great selection of amenities on their own doorstep.
How a BTL Property can Compete with the BTR Market
For many years BTL properties have ruled the roost of the rental industry. While BTR is growing in popularity, it doesn’t mean that buy to let properties have to be pushed to one side. So, how does BTL compete against the BTR market? Here’s how:
Something a BTL property can offer that can’t be matched in BTR is that personal touch. Despite how often it looks on TV, the tenant/landlord relationship isn’t just based on money.
A personal connection can be what drives a strong and happy tenant/landlord relationship. Stories of landlords reaching out to tenants at the beginning of lockdown to ease eviction fears were a bright spot for an industry that can be accused of being coldhearted at times.
If there’s ever a problem with their BTL property, a tenant can contact their landlord directly, speak to them, and the issue can often be resolved within a day or so. Quick, efficient, and personal.
This level of one-on-one assistance can be very difficult for a tenant living in a BTR apartment. A company with hundreds of tenants being looked after by a huge amount of staff will never be able to provide the same level of service that a landlord could who might only have a handful of tenants and lives nearby.
Nothing is more appreciated in a landlord than the little touches; a bottle of wine, a small food delivery, or a hamper when a tenant moves in can do wonders for developing that rapport between both sides.
Everybody wants a space to call their own, a place to curl up with a book as the rain drips down the window, somewhere to invite friends for a catch-up after far too long. But not everybody can agree on what their ideal space looks like.
For many, BTR offers an attractive, sleek, clean design. However, BTR apartments are built to a spec. Every person moving into a complex lives in near-identical apartments with only a few changes such as colour schemes standing out. A BTL property can offer a more unique living space. Character can be what makes a property more appealing to the target market.
A BTL property, if well-designed, can compete and improve on a BTR one. If your space welcomes tenants into a bright, contemporary space that catches the eye you won’t need to worry about being left behind.
It’s hard to furnish a property, be it bringing life into a brand new apartment, or complementing the character in an old one. If you need some assistance our expert design team is here to help.
Can a Buy To Let Property Compete?
The truth is that both options should easily be able to exist together. There are things a BTL property can do that a BTR property cannot — and vice-versa.
Music streaming services used to be a novel concept. But convenience, and consistent quality made it an ever-growing industry throughout the decade. And today, streaming is the top dog of the music industry. There’s no alternative, right?
Actually, there is. The rise of streaming brought with it the vinyl resurgence. Vinyl offers a more traditional, stripped back, human way to listen. They aren’t duking it out at the top of the industry, they’re servicing different audiences and benefiting each other.
Similarly, build to rent could well be the future of the rental market in the UK and around the world. But as with vinyl, it doesn’t have to mean that buy to let will die. They can complement each other; not necessarily competitors, but two sides to the same coin, both offering complimentary services to benefit different tenants.