The generation who can’t afford to buy their own place because the property market boom put the prices beyond them are being targeted by a new type of landlord.
Gone are the days when you found your first flat in an advert in the newsagent’s window.
Then you’d meet a landlord who saw his property empire – three flats with flock wallpaper and dodgy swirly carpet in the bathroom – as something to barely bother about in the hours away from his main occupation.
Now, the big boys want a piece of the Millennial action. And I mean the really big boys. The firms that have huge property marketing budgets and even bigger ideas, with slick property marketing fuelling tenants’ desire for fully serviced apartments.
As the Financial Times reported last month, institutional investors are getting in on the act. Millennials are in their sights as they hunt for that all-important six per cent annual return on their investment.
Making a killing
Part-time landlords traditionally dominated the £1 trillion property rental sector. Now big investors like the pension funds think they can make a killing.
It’s a whole lot more professional and their focus on property marketing ensures they appeal to their target clients, and feed the desires of would-be tenants with a taste for easy living.
Together, this has seen the number of custom-built privately owned rental apartment blocks shoot up.
Student accommodation, with all mod cons, has been a growth sector. But it’s affluent Millennials, brought up in comfort in the good times of the late 1990s and early 2000s, where there’s a real opportunity to make a premium and that’s where there’s a new focus in property marketing.
In the London property market, young renters have been the fastest-growing sector over the past three years, although the picture is less skewed across the UK, with more importance placed on rented family homes away from the big cities.
Saving for a deposit
Young people might find it difficult to get on the property ladder themselves – saving for a deposit can seem as if it will take them forever – but they don’t mind paying to be looked after.
So the higher-earning renters are being targeted with slickly designed, fully serviced apartments that leap off the pages of estate agents’ marketing materials.
We’re talking one and two-bedroom flats with lots of shared space – the likes of roof gardens, gyms, dining rooms, running tracks, cinema rooms and work zones.
Agents say the rental prices in these build-to-rent blocks are by and large higher than in the bulk of the rental market; it is a lucrative niche that feeds a desire for a certain kind of lifestyle.
The build-to-rent sector is only a fraction of the residential letting market but it is growing, partially because of those demanding young professionals who can’t yet afford to buy their own place flee the nest.
Last year, 17,000 homes were completed in the sector in the third quarter of last year, according to official figures from the British Property Federation.
There were 24,000 under construction and a further 55,000 with planning permission.
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