March 31, 2020
In recent years there has been a UK-wide growth in the development of purpose built and run private rented sector accommodation, often referred to as “build to rent “(BTR). It is one of the most significant areas of growth in the real estate market.
While the explosion of BTR has in part been driven by demand in London, it is clear that regional cities are also areas of focus for most investors. Manchester, Liverpool, Leeds, Birmingham, Cardiff and Edinburgh have been at the forefront of development in the regions, but the North East now appears to be fully embracing the BTR model.
What is on the BTR agenda for the North East?
In 2019 Newcastle welcomed its first new true BTR scheme in recent years in the form of The Forge, which is situated at Forth Banks. While the development can be credited with forging the way forward in Newcastle, it is certainly not an exception. Newcastle alone has seen plans for investment in the old Brett Oils site on Gateshead Quayside, which is expected to go through a multi-million transformation in coming years. Pottery Lane, also at Forth Banks, is subject to discussion around a comparable level of investment. Similarly, there are advance plans for a regeneration project in the form of West Quayside Village, and plans are underway for a luxury development at Crawhall Road in Ouseburn. To that we can add two large blocks of BTR planned at Strawberry Place and the recently submitted planning application for around 300 BTR units at the East Quayside.
These examples are just scratching the surface of the development and investment opportunities across the north east. It is tremendous to see investors and developers in BTR recognise the value and potential in Newcastle.
Bringing new life to the region
While the immediate benefit of BTR is the ability to satisfy the evolving appetite for a different
way of living, there are also a number of other benefits of BTR to the region, not least expanding employment and business prospects. Not only
are there opportunities for professionals in the initial construction and development industries, but there are also openings for other businesses to engage with BTR in the ongoing running of the schemes.
At Womble Bond Dickinson, we have been active in the private rented sector for many years and have a dedicated national BTR team, acting for a number of key developers and investors; involved in significant BTR projects all over the country. Given the scale of our footprint in the north east it is pleasing to see BTR get a significant foothold in the region.
How will COVID-19 Affect BTR?
It is likely that most live development sites will pause or at least slow down during the pandemic. How long that is for remains to be seen but with a minimum three week shutdown it is clear that the impact on expected delivery dates will not be insignificant. While most development agreements will cater for extensions of time, the investor of course will be spending money for longer before taking handover of the finished scheme, which could put a squeeze on likely returns in the short term. For investors and landlords operating existing schemes in the private rented sector there are a number of emergency measures of which they should be aware. These include potential restrictions on removing tenants from premises.
If you have queries in relation to a live BTR development or your obligations in respect of an existing scheme please contact the WBD team who will be happy to help.
Womble Bond Dickinson
– Advertising feature –