John Lewis' Build to Rent Plans Move Forward
As the UK's Build-to-Rent (BTR) industry continues to expand, retailer John Lewis has thrown its hat into the ring and is moving forward with its plans to build 10,000 rental homes within the sector.
The move comes as the company's retail fortunes are waning in the face of so much online competition and it works towards having 40% of the company diversified away from the tough sector. The partnership benefits from owning much of the property its stores are on and it plans to utilise car parks and space above Waitrose stores for the project, which will provide further choice and supply for tenants across the country.
Meanwhile, the BTR industry is being hailed as a pet friendly option for tenants as a lettings agency specialising in the BTR market states that some 49% of homes in the sector allow pets. That's a favourable proportion when compared with the Buy-to-Let (BTL) lettings market and adds fuel to the political debate to encourage more landlords to allow pets into rental properties.
John Lewis Boost for BTR Industry
The BTR industry is currently upbeat even as the effects of the coronavirus pandemic linger and estimates suggest the BTR pipeline will boost the sector by £10.9bn in 2021. Add to that the ambitions of John Lewis and there’s scope for further growth in 2022 and beyond. For John Lewis’ part, they’re looking to diversify their investments and profits away from the retail sector while also planning to be in the BTR housing sector for the long-term.
“Typically a developer might try and maximise returns and then move onto the next one,” Chris Harris, the partnership’s property director, said. “We are not trying to do that. We are aiming to charge a fair rent and to stay for the long haul.”
With plans for 10,000 rental homes ranging from studio flats to four-bedroom houses, up and down the country (but starting in south east England) the firm is well-placed to achieve that. Some 7,000 homes are currently expected to be constructed on land already owned by John Lewis while the remainder will be on new developments with their chosen construction partners.
The timing of the retailer stepping forward with its plans to expand into the BTR industry is also positive. That’s because house prices have surged in recent months, thanks in large part to the stamp duty holiday, encouraging home owners, including those in the BTL sector, to sell up, resulting in lower availability of rental homes in many parts of the country. The BTR sector offers tenants certainty that, provided they pay their rent and abide by the rules, the property will remain a rental home regardless of the broader property market.
BTR Homes More Likely to Accept Pets
Another detail of interest in the BTR industry is the attitude towards pets. Research from BTR specialist Ascend, shows that almost half of BTR schemes welcome pets in their rental homes. That’s something that will be good news for many of the UK’s growing army of tenants.
One reason for this positive view on accepting pets in a rental property is that the BTR is focussed on the long-term provision of rental accommodation. By offering benefits and accepting details that are associated with tenants wishing to remain somewhere for the medium-to-long-term, the BTR sector will become increasingly attractive to tenants as it continues to expand.
With the industry set to grow sharply over the next five years, its likely tenants today and in the future will welcome this attitude towards the longer-term rental model. As long as average house prices remain high in comparison to average earnings, the BTR sector could become the backbone of the lettings industry and provide long-term security to tenants across the UK and also investors in the BTR sector.
