Bristol has long relied on its tens of thousands of rental flats and homes, the vast majority of which have traditionally been held by private landlords.
It is surprising that the larger corporate landlords have not earlier tapped into this market in the same way they have with student letting (an early form of PRS).
However, things are changing rapidly and there is demand for professionally organised, on-site management of rental properties. The PRS (private rented sector) as it is known, is growing in the city.
What is a PRS Scheme?
PRS schemes generally consist of a block of flats perhaps with a grouping of houses which remain in the ownership of a single landlord, who provides maintenance and other services to the whole site.
There are numerous large schemes at various stages of implementation in Bristol.
Three high profile schemes are: at Finzels Reach for 194 homes, “ND7” at Temple Quay for 255 homes and a site in Redcliffe Quarter for 128 homes.
Whilst these schemes may be primarily aimed at young professionals and families there is another demographic whose demand for rental properties is growing.
Retirement PRS has been dubbed the ‘next student accommodation market’.
For investors there is the added advantage that the numbers of over 65s has grown rapidly. In 1996, 16% of the population was over 65, in 2016 it was 18%. It is projected to be 24% in 2036. Many will not own their home or maybe even want to. There are advantages if you want to hand over all maintenance responsibility and move somewhere with additional services on-site.
Investing in PRS Schemes
At VWV, we will see many PRS schemes of all types in the coming years. As an investment, it requires massive upfront investment which will only be recouped over many years. Whilst this is not dissimilar to the commercial market, there are different risks.
On a commercial property, a tenant signs up for 5-10 years, on rising rents. On domestic PRS, the rental contract is likely to be for an initial 12 months maximum. Therefore each site could more quickly be at risk of under-occupancy or falling demand.
The Key to Success
It will be key to PRS schemes to be in the right place and to offer the right services. For example, the ONS has just announced that the under 25s spend a third of their leisure time online.
If a PRS scheme does not have excellent broadband, it will not be attractive. Most people probably don’t yet consider broadband speed before they buy a house; when renting they will.
Finally, all of us will have to take care that changes in the residential sector do not further disadvantage those that cannot afford to buy.
Undoubtedly PRS schemes will require a hefty up-front deposit. Councils will require affordable rental units within PRS schemes as part of the planning. Also, Shelter is piloting a bond scheme in partnership with the Bristol Credit Union. It will assist homeless families by providing the deposit, by way of the bond, to enable them to get into a PRS scheme. Their efforts should be supported.
David Bird is a partner at award-winning regional law firm VWV. David can be contacted on 0117 314 5382 or at firstname.lastname@example.org.