The data, sourced before the Covid-19 outbreak using residential lettings data, also reveals the boroughs where BTR is most established today.
Top of the table is Tower Hamlets, where BTR’s share of the rental market is higher than in any other borough, at 11%, followed by Brent and Southwark, where BTR has a 6.6% and 3% share of the local rental market respectively.
These boroughs also have high demand for BTR and can achieve the highest rents, according to Houzen. BTR in these boroughs is attracting renters willing to pay 18% to 24% above the average local market rent.
“If [BTR providers] ask for 25% above the market average and are able to close at 23% above, they’re doing a good job,” says Isabelle Li, assistant manager at Houzen.
But she adds that from an investor’s or developer’s point of view, “I wouldn’t necessarily invest in Tower Hamlets”, because the BTR market share in this area is already high and there is strong competition from providers of buy-to-let properties.
The study indentifies Barking, Newham, Ealing, Greenwich and Hackney as good areas to invest in new BTR development. “A lot of regeneration is happening, which means a lot of BTR opportunities and a good amount of healthy competition as well,” explains Li.
Better data would allow developers to better understand the market, she adds. “What we’ve seen is a lot of those BTR providers have their own data, but their figures only relate to 1% of the market,” she says.
“By using the data we have, which covers the other 99% of the market, BTR providers can increase their revenue by 30% to 50%” through increased rent premiums, tenancy lengths and providing the amenities their customers will pay for.”
Source: Residential - propertyweek.com
