Canary Wharf Group are adding another 2,000 flats to their Build To Rent portfolio. Should private landlords be concerned with the effect of additional rental supply on rental yields?
Several new skyscrapers previously allocated for private sale will now be developed as Build To Rent (BTR) under the company’s specialist platform Vertus.
Canary Wharf Group has already completed 1,137 Build To Rent flats across three schemes; 10 George Street, 8 Water Street and Newfoundland.
Alastair Mullens, managing director at CWG’s rental platform Vertus recently told the Estates Gazette: “While Wood Wharf had always been intended for residential, with 3,600 homes across the 23-acre parcel, the new plans are a shift away from the previous for-sale product. The neighbourhood already has two private-market buildings, Ten Park Drive and One Park Drive
Across the wider estate this means residential and BTR from the West to the East along the South Quay, with a further 1.6m sq ft also earmarked at North Quay next to Canary Wharf Crossrail Station.”
What effect will this additional supply of high quality rental property have on rental values?
The prospect of 2,000 high quality rental apartments managed by Vertus and targeted at professionals working in Canary Wharf might be a concern for private landlords seeking the same tenants.
However, the cost of renting the Vertus apartments is significantly higher than the cost of renting a comparable apartment situated in another centrally located development in or close to Canary Wharf. Vertus are advertising apartments to rent in George Street, Walter Street and Newfoundland, the average advertised rent across all three buildings is as follows:-
Studio apartments – £1,964 pcm
One bedroom apartments – £2,368 pcm
Two bedroom apartments – £3,343 pcm
Three bedroom apartments – £5,331 pcm
Fisks London have recently handled the following comparable property lets:-
Studio apartment – 10 Park Drive, £1,622 pcm
One bedroom apartment – 10 Park Drive, £1,950 pcm
Two bedroom apartment – Discovery Dock East, £2,400 pcm
Two bedroom apartment – Ability Place, £2,550 pcm
Two bedroom apartment – Baltimore Wharf, £2,600 pcm
Three bedroom apartment –Talisman Tower, £2,900pcm
All the properties above are located a short walk from Canary Wharf tube station, and have the benefit of 24 hour Concierge and leisure facilities.
In comparison to the Vertus asking rents these apartments offer much better value for money.
How can Vertus justify such high rents?
In my view there are two important and material differences between renting from Vertus and renting from a private landlord via an agent;-
The first is what Vertus call ‘flexible tenancies’, which means they will consider tenancies for a period of less than six months. This is not a new concept, tenants have always had to pay a premium for the flexibility of a short term tenancy. The majority of tenants we introduce to our landlord clients prefer a longer term tenancy, so in this case, I believe they would prefer to rent a better value apartment from a private landlord via an agent for significantly less rent than the Vertus offering.
The second difference is the on-site maintenance provided by Vertus. Tenants will be attracted by the perceived efficiency of an on-site maintenance team. The ability to report a leaking tap, malfunctioning heating or whatever the fault maybe to an on-site technician, employed by the same company that the tenants rents the apartment from and who developed the building, does provide confidence that any issues will be dealt with promptly.
How can a landlord in the private sector compete with the onsite maintenance provide by a build to rent landlord?
First impressions count. A well presented property will give the tenants confidence that the landlord will look after the property during the tenancy. Instructing the agent to inform tenants that any outstanding faults will be dealt with shortly or soon after they move in isn’t good enough. The tenants will just move on to the next apartment on their viewing list.
Retaining the agent on a fully managed basis will provide the tenant with the confidence that any maintenance issues will be dealt with efficiently by the managing agent during the tenancy. In fact many relocation agents representing large corporates only arrange to view property that is managed by an ARLA registered agent.
Having an ARLA registered agent manage the property gives the tenant the peace of mind that a professional third party, committed to delivering first class service standards will efficiently resolve any maintenance issues during the tenancy.
For more information on our managed services click here.