Revolutionising how housing is developed, managed, and inhabited
The rental sector is experiencing a seismic shift, revolutionising how housing is developed, managed, and inhabited. The emergence of socially responsible investing and the increasing prevalence of Build to Rent (BTR) schemes are reshaping the private rented sector (PRS). This transformation is driven by political changes, economic trends, and the growing urge for sustainable living solutions.
One of the main driving forces behind this evolution is the wave of recent policy changes. The Renters’ Rights Bill aims to professionalise the PRS and protect tenants and landlords. Introduced as draft legislation during the previous Parliament, the bill marks a significant turning point for rental housing.
Similarly, the rise in capital gains tax (CGT), signalled in last October’s Autumn Budget Statement announcement and anticipated since July’s general election, has encouraged some landlords to restructure their business models. Many are now utilising limited companies for property holdings, taking advantage of tax benefits since corporate-owned properties are exempt from CGT.
RISE OF INSTITUTIONAL INVESTORS AND BUILD-TO-RENT
The government’s pledge to build 1.5 million homes has caught the attention of institutional investors, making residential properties a lucrative alternative to commercial real estate. This interest is most evident in the Build to Rent (BTR) sector, where largescale developments maximise economies of scale. Corporate landlords have embraced this opportunity, fostering innovation in property management and tenant experiences.
Central to this shift is the focus on Environmental, Social, and Governance (ESG) principles. Institutional investors increasingly prioritise ESG outcomes, recognising their importance in long-term decision-making. A Federated Hermes study found that 88% of institutional investors in the UK now consider ESG factors more critical than traditional financial metrics.
ENVIRONMENTAL RESPONSIBILITY AT THE FOREFRONT
Given that powering and heating buildings account for 40% of the UK’s total energy consumption, the property industry is under considerable pressure to elevate its environmental performance. The BTR sector is leading the charge, integrating sustainable practices and renewable technologies into developments.
Unlike some homeowners who may be hesitant about maintenance complexities, BTR developers can ensure proper upkeep through professional management teams. This benefits tenants with modern, sustainable housing options while supporting landlords in their sustainability goals. However, ESG is not just about the environment. On the social front, the sector is prioritising community-focused designs and amenities. Shared spaces like rooftop gardens and fitness studios are becoming standard in BTR projects, cultivating strong tenant communities and enhancing quality of life.
PROFESSIONALISING THE SECTOR FOR TENANTS AND LANDLORDS
The Renters’ Reform Bill brings significant changes to enhance the tenant experience and welfare. Long-term tenancies, improved services, and better property management are just some of the reforms underway. This shift is further complemented by innovative governance approaches, including streamlined tenancy management systems and dispute resolution frameworks. Faster and fairer processes reduce tenant frustrations while shielding landlords from legal and financial risks.
Emerging technologies and platforms will also play a key role. Professional landlords managing extensive property portfolios can benefit from features like two-factor authentication (2FA) and encrypted document sharing. These tools ensure secure transactions and heightened operational efficiency, cementing the sector’s trajectory towards professionalism.
PAVING THE WAY FOR A SUSTAINABLE FUTURE
As the rental sector embraces socially responsible practices, it’s clear that landlords meeting regulatory demands while fostering innovation and sustainability will not only elevate rental housing but also redefine the relationship between landlords and tenants.
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