Speaking to Property Week, Harry Downes, Managing Director of PRS developer Fizzy Living, said that the introduction of the 3% Additional Properties SDLT surcharge last April had caused three schemes that were “in solicitors’ hands” to fall through.
Explaining that the surcharge had made it harder for PRS developers to compete with housebuilders for land, he told Property Week that Fizzy had offered as much as they could offer but “there was no extra budget in there”.
He said: “You used to have to find 25% more to get a stable income stream than a housebuilder. You had to cut corners or [find a way of] de-risking the bigger schemes. It’s another 3% on top. Where’s it going to come from? It’s not a level playing field.”
Our Chief Executive, Martin Skinner, doesn’t think build-to-rent will have the financial muscle to compete with the £2tn BTL sector. “Despite stamp duty, for sale developers will always be able to outbid build-to-rent developers for sites and there simply isn’t the appetite from institutions to commit the sums required,” he said. “A successful PRS model however already exists in student ‘co-living’ accommodation.”
There is a clear demand from young professionals for high quality co-living accommodation as demonstrated by The Collective, who managed to obtain consent to rent part of a student accommodation scheme in Harlesden ‘Old Oak’ to non-students. Tenants get a fully furnished, all bills included en-suite room and benefit from shared spaces such as lounges, entertainment spaces as well as facilities including a gym, spa, cinema room, library, restaurant, bar, launderette, convenience store and roof terrace.
Martin added: “If this model is opened up more widely to young professionals (non-students) and given the same tax treatment as student accommodation (i.e. exempt from the Additional Properties surcharge), it will be a win for developers and investors who would be able to mine a rich seam in virgin territory, and a win for young professionals who desperately need these high quality affordable and sociable homes.”