Last month this column focused on a recent survey suggesting that UK tenants may be paying more in rent per annum than owner-occupiers do in mortgages.
My response was that this reflected the growing popularity of renting while making the point that the amount of money paid in rent strongly suggested that many tenants were living in this type of accommodation through choice rather than any inability to afford a mortgage. This trend is, in some measure, being boosted by the growth, albeit still in relative infancy, of “build-to-rent” housing developments, a term that really speaks for itself.
In Scotland, a landmark in this phenomenon has been reached with the announcement of a planned scheme in Glasgow whose estimated 500 apartments are being constructed for rent. Combining a 20-storey tower and lower-level blocks, the flats will be located at Central Quay on the Broomielaw, which puts them within easy walking distance of the central business district. Complementing the homes will be a shared resident’s lounge, roof terraces, a gym and a games room. Work is expected to begin in the second quarter of 2020 with completion anticipated for summer 2021.
The company behind the scheme, developer and property manager Platform, has a proven track record, having built and operated a number of similar schemes south of the Border and is committed to creating 5,000 additional units within the next five years. Therefore this scheme has to be seen as a welcome addition to Scotland’s residential rental stock.
However, while it struck me that the homes will be complemented by communal features such as a gym and games room, this got me thinking: where is the crèche, the swing park, the open space to enable children to kick a ball about?
I presume the answer is that this development will be adult-focused, which currently seems to be the norm for those build-to-rent projects now under construction or already in operation. But it is not only singles or childless couples who wish to rent.
From time to time I emphasise the investment value of, and tenant demand for, “the Bruntsfield flat”, a generic term for a type of rental accommodation in Bruntsfield and similar districts of Edinburgh.
But somewhat under the radar there is another highly-popular type of rental property much sought-after by families. I refer to the “four in a block”, cottage-type flats that were developed immediately before and after the Second World War as a private rental alternative to municipal housing.
There are several extensive examples in our two biggest cities – at Crewe Toll, Carrick Knowe and Colinton Mains in Edinburgh; Croftfoot and Kings Park in Glasgow. Much of the attraction of these properties was based on how the original architects made the most practical use of the interior space. Each property came with a lounge, dining room, kitchen, bathroom and two bedrooms. Many of these homes have been bought by their former tenants but some were subsequently sold on to private landlords so the rental option remains, albeit much reduced from a generation ago.
I believe that the popularity of these properties, especially among blue collar workers, to be indicative of a wider underlying demand for long-term rental accommodation designed for families. Clearly the institutions are currently wary of the financial implications, but the direction society is taking points to more flexible housing tenure options being required by adults with children as well as those without (or whose offspring have flown the nest). And the more terraced, semi-detached and even detached villas that are built for rent, the cheaper they will become, pro rata, in construction and rental terms, leading to the creation of an acceptable balance between returns for investors on one hand and rental affordability for tenants on the other. Truly an example of how profit and social need can co-exist.
David Alexander is MD of DJ Alexander