Developers
For property developers, BTR provides an opportunity to attract good, long-term tenants, with the moderate rental yield (estimated at around 4% nationally) ensuring they see a return on their investment over time.
Running costs are significantly lower as new-builds are substantially more energy efficient and the better level of build quality and compliance means that maintenance costs are also reduced.
Depending on how the BTR development is managed, it can also offer developers a more hands-off approach, saving them a considerable amount of personal time and money.
Tenants
BTR also plays into current trends in the housing market. Rising property prices in the UK – coupled with the cost-of-living crisis – have made it even more difficult for first-time buyers to get onto the property ladder. As a result, many people are renting until much later in life.
But renting offers young, ambitious people an element of flexibility that buying cannot – so they can move easily when new career prospects present themselves.
BTR homes, in particular, appeal to residents for their modern and community-focused design. They’re often designed around the ‘15-minute city’ model to create a community that has easy access to amenities, convenient affordable travel and lower carbon emissions.
Summing up the mutual appeal of BTR, the Royal Institution of Chartered Surveyors writes: “Renters settle for smaller living spaces in exchange for hotel-style facilities – glamorous communal areas, co-working spaces, communal dining rooms, gyms and the like. Developers can carve more flats out of the same amount of space, increasing their margins and the long-term rental yields.”
Heat Network obligations
Developers’ obligations with regards to communal heating systems are at odds with the ‘hands-off’ appeal of BTR.
As per the Heat Network (Metering and Billing) Regulations 2014 (updated in 2020), multi-occupancy new builds must have meters installed that enable accurate measurement of the supply of heat, cooling or hot water to each tenant (unless it would not be technically feasible or cost-effective to do so).
There are also ongoing obligations to ensure meters are continuously operated, properly maintained and periodically checked for errors.
Where meters or heat cost allocators are installed, the individual(s) responsible for managing energy in the building must ensure billing is accurate and based on actual meter readings. Tenants are then entitled to request certain billing information, where it is technically possible and economically justified.
Heat suppliers with a new heat network must submit an initial notification to the Office for Product Safety and Standards (OPSS) on or before the day it becomes operational. Heat suppliers must submit a renotification within every four-year period thereafter.
'One-stop' energy management solution
At Communal Energy Partners, we provide a hassle-free alternative to owners of new or existing residential and mixed-use schemes who want to maximise value, reduce risk and protect cash flow.
Our services cover everything from system installation and commissioning to billing and reactive maintenance. Many developers in London and across the UK take advantage of our fully-managed solution which gives them access to the full range of our expertise, allowing them to consolidate their communal energy management responsibilities to a single provider.
We can even assume responsibility for credit control and gas procurement, safeguarding your cash flow and allowing you to focus on maximising the yield from your BTR investment.
Get in touch today to see where we can help in the build and management of your next BTR development.
