Build-to-rent vs buy-to-let, which offers the best value for money?

June 27, 2019

Recent research by Savills has predicted the build-to-rent market will soon account for a third of the private rental market, but many believe the Government’s encouragement of institutional investment away from the buy-to-let sector and into the build-to-rent sector has, and will, be costly for generation rent.

Leading room share platform, ideal flatmate, is the only lettings platform outside of Zoopla and Rightmove to have exclusive listing rights for all UK build-to-rent properties, matching groups of tenants who show interest in a given development and then providing them to each developer once a flat is fully let.

Ideal flatmate looked at the cost of renting a room in all of their build-to-rent developments and then compared this to the average cost of renting in the wider buy-to-let market. However, the vast majority of build-to-rent developers offering a wealth of additional benefits included in the price such as gym use, amenities, wifi and even parking. So ideal flatmate also looked at the cost of these extras on top of the average rent for the wider area to give a more like for like comparison on build-to-rent value for money.

The research shows that on average, the cost of renting a room in a build-to-rent development is just 15% higher than the cost of renting in the buy-to-let market – £868 on average compared to £752.

However, there are a total of seven areas across the UK where build-to-rent offers even better value than the wider market.

JLL – Queen Street, Leicester

JLL’s development in Queen Street in Leicester has a rental cost of just £405 a month, 33% cheaper than the room rental average and cost of amenities in Leicester (£605).

JLL – Greenwich

Their development in Greenwich is also 18% cheaper than the wider cost of renting and amenities in the borough at £717 a month.

Urbanbubble – Liverpool

Urbanbubble’s development in Liverpool costs just £500 a month compared to the average of £575 for a room and amenities elsewhere in the city – a 13% difference.

Allsop – Newcastle

Allsop’s Forth Banks development in Newcastle is also 13% cheaper at a cost of £500 a month with renting a room and bills across the city as a whole totalling £591.

Liv Group – Bath

LIV Group in Bath and JLL’s Harrow development are also 6% and 5% better value than the wider area respectively.

Way of Life – Manchester

In Manchester there is almost no difference in value between the average build-to-rent cost between LIV Group and Way of Life’s developments and the city average, coming in £2 cheaper on average.

The highest build-to-rent premium is in Tower Hamlets where the average cost of a room in a development is 44% higher than the borough average.

Lewisham is the home to the next highest rental premium at 35%, with Salford build-to-rent costing 14% more on average.

Co-founder of ideal flatmate, Tom Gatzen, commented:

“Build-to-rent has come under scrutiny due to the higher rental costs but when you consider the additional benefits there is a very strong argument that these developments provide much better value for money.

For a start, they are new builds so the quality is very good and they have a much more professional management structure in place to support tenants when compared to the traditional communication chain of the tenant, letting agent and landlord.

They also offer a lot more for your money in terms of amenities included in the price, with many providing wifi, bills and a gym as standard. This comes on top of other benefits such as parking and private gardens and while you pay more as a lump rental sum for these benefits, the convenience of paying for everything in one go is something that appeals massively to today’s generation of tenants.

We are crying out for more rental stock across the UK and the number of us reliant on the private rental sector is only going to increase. Build-to-rent provides a great solution when it comes to providing more homes at scale and while change will always be met by a degree of criticism by the industry, we must surely focus on the need of the tenant first and embrace anything that helps provide more roofs over heads.”

B2R Development
Development
Room rental per month
B2R Average
Wider Area Average Cost (inc amenities)
Difference
Leicester
JLL
Queen St, Leicester LE1 1QD, UK
£405
£405
£605
-33%
London Borough of Greenwich
JLL
London SE10 8GJ, UK
£717
£717
£872
-18%
Liverpool
Urbanbubble
Chatham Pl, Liverpool L7 3HD, UK
£500
£500
£578
-13%
Newcastle
Allsop
Forth Banks, Newcastle-upon-tyne, NE1 3AA, UK
£517
£517
£591
-13%
London Borough of Hillingdon
Be:Here Hayes
Hillingdon, UB3 1AJ, UK
£775
£775
£867
-11%
Be:Here Hayes
Hillingdon, UB3 1AJ, UK
£775
Bath
LIV Group
Bath BA2, UK
£713
£713
£761
-6%
London Borough of Harrow
JLL
Harrow HA1, UK
£813
£813
£852
-5%
London Borough of Newham
JLL
London E15 2FD, UK
£712
£839
£868
-3%
LIV Group
London E6 1DN, UK
£1,325
LIV Group
London E6 1DN, UK
£798
LIV Group
London E6 1DN, UK
£732
LIV Group
London E6 1DN, UK
£622
Manchester
LIV Group
Manchester M1 2FB, UK
£647
£640
£642
0%
Way of Life
Goulden St, Manchester M4 5EL, UK
£632
London Borough of Ealing
LIV Group
London W3 6LB, UK
£900
£900
£864
4%
Birmingham
Allegro
Birmingham B4, UK
£650
£600
£551
9%
Allegro
Birmingham B4, UK
£533
Allegro
Birmingham B4, UK
£600
Way of Life
Birmingham B16 8FU, UK
£617
London Borough of Sutton
Greystar
Sutton Ct Rd, Sutton SM1 4SZ, UK
£845
£898
£805
12%
Greystar
Sutton Ct Rd, Sutton SM1 4SZ, UK
£995
Greystar
Sutton Ct Rd, Sutton SM1 4SZ, UK
£920
Greystar
Sutton Ct Rd, Sutton SM1 4SZ, UK
£833
Edinburgh
JLL
Edinburgh EH3 9RH, UK
£700
£700
£625
12%
London Borough of Brent
LIV Group
Wembley HA0 4AF, UK
£813
£994
£882
13%
LIV Group
Wembley HA0 4AF, UK
£652
Tipi
Wembley Park, HA9 0FA
£1,200
Tipi
Wembley Park, HA9 0FA
£1,100
Tipi
Wembley Park, HA9 0FA
£1,100
Tipi
Wembley Park, HA9 0FA
£1,100
Salford
Grainger Plc
Salford M50, UK
£540
£699
£614
14%
Grainger Plc
Salford M50, UK
£465
Grainger Plc
Salford M50, UK
£890
Grainger Plc
Salford M50, UK
£900
London Borough of Lewisham
Essential Living
Copperas St, Greenwich, London SE8 2DA, UK
£1,000
£1099
£814
35%
Essential Living
Copperas St, Greenwich, London SE8 2DA, UK
£1,200
Way of Life
London SE8 5EJ, UK
£1,097
London Borough of Tower Hamlets
Essential Living
Three Colts Ln, London E2 6JR, UK
£1,250
£1442
£1,002
44%
Greystar
Flat 1303 Isle of Dogs, London E14 9ZP, UK
£1,612
Greystar
Isle of Dogs, London E14 9ZP, UK
£1,400
Greystar
Canary Wharf, London E14 9ZP, UK
£1,504
Overall Average
£868
£752
15%
*Amenities included – gym membership, wifi and utilities as shown in the table below.

Build-to-rent price data sourced from ideal flatmate

Wider rental costs sourced from Gov.uk, London Data Store and Gov.Scotland

Additional costs of living sourced from Numbeo

 

Location
Average Rent (one room – per month)
Gym (per month)
WiFi (per month)
Utilities (per month)
Total Costs including rent (per month)
Bath
£540
£40.00
£30.22
£150.77
£761
Birmingham
£368
£21.84
£30.04
£131.34
£551
Brent (London borough)
£638
£42.71
£32.17
£168.73
£882
Ealing (London borough)
£620
£42.71
£32.17
£168.73
£864
Edinburgh
£425
£32.61
£29.91
£137.60
£625
Greenwich (London borough)
£628
£42.71
£32.17
£168.73
£872
Harrow (London borough)
£608
£42.71
£32.17
£168.73
£852
Hillingdon (London borough)
£623
£42.71
£32.17
£168.73
£867
Leicester
£367
£26.21
£25.47
£186.56
£605
Lewisham (London borough)
£570
£42.71
£32.17
£168.73
£814
Liverpool
£371
£24.17
£27.83
£154.94
£578
Manchester
£429
£25.61
£28.83
£158.18
£642
Newcastle
£374
£23.34
£28.44
£165.45
£591
Newham (London borough)
£624
£42.71
£32.17
£168.73
£868
Salford, Greater Manchester
£401
£25.61
£28.83
£158.18
£614
Sutton (London borough)
£561
£42.71
£32.17
£168.73
£805
Tower Hamlets (London borough)
£758
£42.71
£32.17
£168.73
£1,002
Average
£752

 

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