The build-to-rent boom – how developers woke up to making homes just for tenants
Two large-scale housing projects in London are specifically intended to be let, not sold
Aygul Zagidullina is not mad about football. However, when she received a newsletter through the door about new rental homes opening next to Wembley stadium in north London, she and her husband did not need much persuading.
They were the first tenants to move into Quintain’s 7,600-home Wembley Park development, which will include 5,000 purpose-built rental homes. It is the biggest build-to-rent project in the UK, worth £3bn, and when it is finished in 2025-26, about 15,000 people are expected to be living and working on the 85-acre site.
Purpose built blocks of rental homes – common in other countries such as the US, Germany and France – are a relatively new phenomenon in Britain but are fast becoming a hot investment for property developers and City firms such as Legal & General, eager to tap into the rising trend for long-term renting. The sector is expanding across England, with 80,855 homes completed or planned, according to recent official figures.
Angus Dodd, the chief executive of Quintain, which was acquired by US private equity firm Lone Star in 2015, said the company had decided to switch from building for sale to building for rent because it provided a reliable longterm income stream, in contrast to the ups and downs of the housebuilding cycle. He said both government support for build-to-rent, and investor interest in it, had been increasing.
“It’s a solution to the housing crisis: it could be a big solution,” Dodd said. “It sits alongside housing in all its various forms – modular housing, micro living.”
Some 16% of the tenants already living at Wembley Park, where a third rental block has just been completed, are key workers such as nurses, teachers, soldiers and police.
More than 1,300 homes have been built and a further 3,000 are currently under construction. The tallest tower will be 26 storeys – not quite high enough to see into the stadium. Most of the planned 63 new buildings will have roof gardens. A theatre, office buildings, a primary school, doctor’s surgeries and a park the size of four football pitches are also in the works.
Zagidullina and her husband left their privately rented one-bedroom flat in Whitechapel in south-east London, where they paid £800 in monthly rent, and moved into a £1,500-a-month one-bed at Wembley Park in March 2016. When their baby, Emily, was born nine months ago, they upgraded to a two-bedroom flat with a terrace, with a monthly rent of £2,050.
The rent includes utility bills as well as ultra-fast broadband. Communal lounge areas adjacent to the entrance come with kitchenettes and Sky TV, and a concierge is on hand 24 hours a day to deal with deliveries and emergencies.
Quintain stresses that its management company, Tipi, does not charge letting agent fees, or for end-of-tenancy cleaning. The government wants to ban fees to letting agents, which tend to average £223 but can be as high as £800.
Zagidullina described the flats the couple had rented previously as “total disasters”. “In Whitechapel, the landlady said her granddaughter was coming to live there and told us ‘at some point you’ll have to leave,’ but we didn’t know when,” she said. “And our flat in Seven Sisters didn’t feel hygienic.
“This [Wembley] is the perfect area; the perfect professional landlord who doesn’t have a granddaughter. It’s perfect for a family. You pay a little bit more here, but you pay for a nice lifestyle.”
While Quintain admits that many tenants will be “paying a premium for the lifestyle”, it says 32% of the planned homes at Wembley will be affordable. This is a higher proportion than seen at many other London developments, and just below the 35% targeted by mayor Sadiq Khan (down from his election promise of 50%). The borough in which the development is sited, Brent, is one of London’s poorest.
Nearly 40% of the affordable Wembley Park homes will be let at a discount to market rents, with the maximum rent set at 65% to 80% of market value; a further 28% will be affordable-rent, while 33% are earmarked for shared ownership and discount market sale.
Brent supports the mayor in seeking a minimum of 35% affordable housing on all new developments, and delivered 30% in the three years to 2015-16, above the 24% London average, a council spokeswoman said. “We expect to see Quintain construct 3,000 new homes by the end of the year. This can only help to tackle the dire housing situation in London.”
The first big UK build-to-rent scheme to get off the ground was East Village in Stratford, the former Olympic athletes’ quarters which were turned into 3,000 homes by UK developer Delancey and Qatari Diar, the property arm of Qatar’s ruling family. Half of the properties are managed by Get Living, which prides itself on its no-fee and no-security deposit policy and on offering threeyear tenancies with a resident-only break clause.
The Duke of Westminster’s property firm is also getting into the game: it intends to build 1,500 rental homes on the site of the former Peek Freans biscuit factory in Bermondsey, south-east London, which closed in 1989.
If Grosvenor’s £500m masterplan comes to fruition, people will be living on the site where Garibaldi and Bourbon biscuits were invented from 2020/21, when the 12-acre development reopens. Grosvenor, owned by the Duke – 26-year-old Hugh Grosvenor, Britain’s youngest billionaire – intends to file for planning permission in October.
At both Wembley Park and the former biscuit factory, the properties are being designed for renters, featuring hotelstyle lobbies and two-bed flats with en-suite double bedrooms to appeal to sharers. There will also be three- and four-bedroom flats for families.
Both Quintain and Grosvenor will manage the rental homes for the long term, and are planning more build-torent projects in London.
Simon Harding-Roots, executive director of major projects at Grosvenor, said: “Build-to-rent hasn’t been done at scale for a century in this country by the private sector.”
He believes the private sector needs to step up its game. “Councils can’t provide all of this, and why should they?” he said. “The housing crisis is obviously very real. We believe we can make a real difference there.”
Harding-Roots said the Bermondsey flats will cater for a broad range of incomes, including key workers earning £25,000-plus a year – “the nurses, teachers and policemen who need to be in London”.
A number of flats will be let at discounted market rent. Discounts are likely to range from 20% off market rents to the London Living Rent with a discount of 50-55% – a new type of “genuinely affordable” housing for middleincome Londoners introduced by Khan. Grosvenor wants to make the discounts flexible, so they can be “dialled up or down” if tenants’ incomes change, so that they are not forced to move.
Southwark Council expects Grosvenor to deliver 35% affordable housing at the factory site, including flats at social rent. Councillor Mark Williams, cabinet member for regeneration and new homes, said: “The biscuit factory is an interesting project that supports our priorities, including the provision of much-needed new homes, especially for residents on low to middle incomes.”
The yellow-brick factory site is a long way from Grosvenor’s traditional heartland in Mayfair and Belgravia, two of the capital’s most exclusive neighbourhoods. The firm is moving into more affordable housing projects after being hit by the downturn in the luxury property market.
Frank Turner, 78, who worked at the biscuit factory from 1960 until 1989 and became its chief fire officer, welcomed Grosvenor’s attempt to “breathe life back into the site”.
“The government are saying you should have homes for lower and middle income type people and in the end, with some companies, it doesn’t materialise,” Turner said. “If Grosvenor can do it, good luck to them, because that’s what’s needed.”
Up to 11 residential blocks of varying heights are planned, with the tallest tower, of 25 storeys, to be built in the centre of the site, as well as a new 600place secondary school.
The biggest of the biscuit factory buildings, a former warehouse, is to be converted into a five-storey block of flats with a large atrium lined by shops and cafes at the bottom. The planned public roof garden, with views across London, will hark back to the factory garden where Peek Freans workers used to enjoy a cup of tea (and a biscuit) during break times.
Two new routes under a nearby railway line will link the development with The Blue, a local street market that has dwindled to a handful of traders. When the Guardian visited, only Russell Dryden, a fishmonger, was plying his trade in the square. He expressed hope that the Grosvenor development, which is expected to create 50 new business spaces in the Victorian railway arches and 1,300 permanent jobs, would revive its fortunes.
3 £ bn Value of the Wembley Park project, which will include 5,000 purpose-built homes for rent 1,500 Number of rental homes hoped to be built at the former Peek Freans biscuit factory in Bermondsey ‘Councils can’t provide all of this and why should they? We believe we can make a difference’
Above, part of Quintain’s Wembley Park development, surrounding the national football stadium in north London; right, an artist’s impression of how it will look when finished; below, one of the flats
Nine-month-old Emily, below, became one of the first tenants in the Wembley development when her parents moved in