It was two years ago this month that plans were announced for Belfast’s first large scale “build-to-rent” housing scheme. The 16-storey apartment block on Academy Street, in Belfast’s Cathedral Quarter, was subsequently granted planning approval in October 2018. Work is now underway to provide 60 two-bed and 30 one-bed apartments with a proposed completion at the end of 2020.
Following on from the Academy Street scheme, in late 2018 plans were submitted for the development of another central Belfast “build-to-rent” scheme, this time on Wellwood Street. Though still in planning, if council planners approve proposals for the Albion scheme, the nine-storey apartment block will feature 277 “build-to-rent” apartments.
Though popular in major UK cities as well as major Irish cities the “build-to-rent” model; where apartments are built solely for private rental with the building being owned by a large investor or institution, has until now been slow to take off in Northern Ireland.
That said, a recent report by The Homelet rental index shows a 4.7% increase in Northern Ireland rents in June 2019 compared to June 2018. This will be music to the ears of “build-to-rent” developers keen to see Northern Ireland rents move closer to those in mainland UK that saw significantly lower growth of only 1.8% year on year.
The same report estimated that in Northern Ireland rents are typically 26.4% of monthly income. This figure still lags significantly behind mainland UK rents that are closer to 30.5% of monthly income.
In mainland UK this type of development has been encouraged by the government, as a potential solution to the lack of quality residential housing stock; particularly in city centres.
Research from 2018 shows the increasing popularity of wholly-owned, professionally managed schemes over traditional “buy-to-let” options. In London particularly, wholly-owned, professionally managed schemes on average achieve a premium of almost 10 per cent for one-bedroom properties and 9.5 per cent for two-bedroom properties.
Concierge services, gyms and residents’ lounges are three commonplace amenities in professionally managed UK mainland “build-to-rent” developments and UK mainland tenants are prepared to pay for the luxury and convenience that they bring.
Industry figures predict a significant increase in demand for rental property over the next 5 to 6 years as what has been termed ‘Generation Rent’ increases to an estimated six million households by 2025.
As this figure is representative of almost 25% of UK households living in rented accommodation before the end of the next decade it is unsurprising that the traditional ‘rental model’ is moving on.
The Belfast Agenda sets out bold ambitions to make Northern Ireland’s capital home to an additional 66,000 people by 2035 and it if the city follows the route of others it will be unlikely that these two “build-to-rent” scheme will be the city’s last.
This article was written by Lisney MD Declan Flynn and first featured in The Irish News on Tuesday 23rd July 2019