The Private Rented Sector (PRS) has grown significantly over the last two decades, with noticeable growth in the last few years. The most recent estimates are that PRS comprises 18% of the housing stock in England and forecasts suggest it may be more than a third by 2032 with many investors buying or building PRS stock as a viable long term investment.
What do you need to consider when you build to rent? Designing a property you intend to keep and not sell means that you need to consider whether it is worthwhile spending more at the outset to reduce the on-going maintenance costs and also making it easier to manage your portfolio in the future.
Imagine trying to arrange for carpets to be cleaned in a communal hallway without a plug socket, or watering a newly landscaped garden where there is no outside tap? Try fixing a leak in a bathroom which is tiled floor to ceiling with no access panel, not easy and very expensive. It does happen!
So, be careful about the items you install. Any upkeep must be paid for from your rental income. At the earliest stage design your development for the PRS market and ensure your design team asks whether any features will help the properties let for the highest value and increase the tenant’s desire to stay there thus reducing void period and on-going letting fees? If not, don’t include them.
Practically, this may mean that you’re Employers Requirements (ER’s) need to be reviewed. To avoid invalidating the warranty negotiate with the installing contractor at the same time as instructing for the initial install for competitive maintenance programme for your plant and equipment during the defects period. Later you won’t get such a competitive deal.
How will defects be managed once the building is tenanted? Review the ERs; are the contractor’s response times adequate? How will you manage this process once the property is occupied and keep your tenant’s content?
Having the involvement of a block and PRS managing agent at the earliest opportunity is likely to bring a lot of benefits to your project. We can provide input during the whole process; from architect’s drawings, ERs, site meetings, right through to marketing of PRS homes, which is vastly different to that of sales.
Whilst there is a lot of legislation surrounding PRS and block management neither service industry is regulated. Hera are registered with the Association of Residential Letting Agents (ARLA) and the Association of Residential Managing Agents (ARMA) respectively.
Our clients have found our input at the following stages of development extremely useful.
- Review of Employers Requirements
- Assist in the planning stages in relation to all manner of things such as refuse and gardening strategy
- Lease review to ensure that all relevant covenants are in place for the smooth running of the development and recovery of service charges
- Tenancy Reviews to ensure that appropriate clauses are inserted to allow enforcement action where applicable
- What you may need to consider for on going management and collection of heat usage if you are installing a CHP system
- How to ensure your development is fit for the future
- Design to manage – we can carry out a proactive review of plant, equipment and specification of décor, units and white goods internally to keep maintenance costs to a minimum
- Attendance at site meetings to get a full understanding of the building make up for on going management and providing input where possible at this stage also
Our services can be provided either on a consultancy basis or where a client intends for Hera to manage the property on completion on a retainer basis. Please contact us on 0345 6838812 to discuss your needs in more detail.