Build-to-rent vs buy-to-let, which offers the best value for money?
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’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).
Their development in Greenwich is also 18% cheaper than the wider cost of renting and amenities in the borough at £717 a month.
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’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 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
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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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