According to data in the November 2014 HomeLet Rental Index, the South East is the most expensive area of the UK to rent in, outside of London.
The average rent for November 2014 was £865 per month in this part of the country, a rise of £55 over the last 12 months. Cheaper commuter links to the capital, combined with the ever increasing demand for, and lack of, suitable properties, are among the biggest contributing factors to these numbers.
What is ‘Build-to-Rent?’
‘Build-to-Rent’ was originally designed by the government to help meet this demand. Originally announced in 2012, the scheme is now being utilised in an effort to accommodate the ever-rising need for rented housing, particularly among those unable to buy.
The principle behind this scheme is for the government – in association with different property developers – to contribute to the financing of new-build properties. They’ve put forward a £1bn fund to be divided among potential developments across the UK, with the developers renting out their buildings themselves, rather than selling them off to pay for the construction costs.
Suited to the markets
The South East is one of the latest areas to see such a development on the horizon and, with the current lack of suitable properties; it can’t come soon enough for those looking for a home.
It was announced in November, by the UK Housing Minister Brandon Lewis, that 5,000 new homes were in development. The £51.6m needed to fund them will come from the government’s allocation, plus other contributions from the Royal Bank of Scotland and the Homes and Communities Agency. Mr Lewis thanked these institutions for their assistance and reaffirmed the coalition’s determination ‘to create a bigger, better private rented sector’.
There will be projects under construction in three areas, Archway, Bethnal Green and Maidenhead, with a completion date of 2016. It’s believed the homes themselves are purposefully designed to suit the markets of young professionals and families struggling to get onto the property ladder. Unlike traditional new housing estates, the developers claim the properties will feature more security and a concierge, as well as managers on-site to support residents.
The future of pricing
Along with the desire to meet the UK’s demand, the hope is that these developments will also help towards bringing down prices in the most expensive areas, such as the South East. A number of other schemes are currently underway in London, but some are not backed by the government and some are subject to bids from other interested investors.
Whether or not this is the solution to the South East’s rental demand remains to be seen though. Equally, if it’s successful, it’ll be interesting to note which areas will be first to follow this example.