Tempting 25-35-year-olds into a state-of-the-art rental property is big business
Welcome to the future of renting: a place where you can find flatmates through a social networking site, broadband and Skype-enabled phones come as standard, and if the washing machine breaks down you can “email, text or tweet” the property manager.
The fairly unglamorous location of Canning Town in east London is the location of a block of private rental flats which, its developers claim, is the shape of things to come.
Around the corner from the tube station, and across the road from a branch of Cash Generators, lies the Vermillion building. After the developers failed to attract buyers through marketing in Asia, 75 of the apartments were snapped up by FizzyLiving, operating as part of the Thames Valley Housing Association. It has now brought them to the private rental market, aiming at professionals aged 25-35.
Managing director Harry Downes refers to them as “rentysomethings”. And, however cringe-inducing this sounds, there is a cohort of people expecting to rent for much longer.
Denied the opportunity to buy by the hangover of university debt, stubbornly high house prices and lenders’ reluctance to offer them loans, these young professionals want somewhere good to live, says Downes, and somewhere they will not be moved on from at the landlord’s whim.
“They want to move when they want to move,” Downes says. “I’m hoping people will stay for three, four, five years.”
FizzyLiving is offering tenancies of between six months and three years and Downes says the company is committed to not sell off individual flats.
The flats, which were made available to rent in early September, are glossy.
Downes says the kitchens are of much higher spec than a developer would put in if it was intending a property to be sold as a buy to let investment.The floors have been downgraded from their original material to something that will tough out more wear and tear, but they are as smart and modern as the shiny bathroom suites, white walls and big windows.
There’s a bathroom for every bedroom, and although the kitchen and lounge are all-in-one the washing machine is tucked away in a cupboard so won’t drown out The Apprentice (or whatever young professionals watch these days).
Tenants get internet connection and 2GB downloads a month free, and can pay for an upgrade. You can also buy a furniture package. On two occasions during my visit Downes assures me: “If [tenants] have any problems you can just call, text or tweet Hannah and it will be sorted out.” In short, it’s almost as if you were still at home and paying rent to mum and dad, except for having to wash your own socks.
From the flats near the top of the 12-storey building the views are quite amazing (if you overlook the building site in the foreground): in one direction you can see the (former) Millennium Dome, in the other the Olympic Park. But as you might expect, you will pay for the best views. A top-floor flat with two bedrooms attracts a monthly rent of £1,999. – and if you were taking the second bedroom you may be loth to split the bill equally for what is definitely a smaller room. That’s a lot of money for a property that is ultimately owned by a housing association.
Lower down the building the views are more prosaic – a show flat on the first floor overlooks a car park and marketplace – and the prices are commensurately down to earth. A one-bed apartment starts at £1,050 a month, which an agent from the nearby branch of Bairstow Eves says is more in keeping with the rest of the local market.
You can certainly find cheaper rental accommodation in Canning Town — a one-bedroom flat on nearby Hallsville Road is on the market for £650 a calendar month — but Downes believes tenants will find the money, even if that means asking for help from their parents. “I think a lot of parents will say ‘I’ll pay £200-£300 a month to top your rent up so you can have a good new place to live.’ Parents will like that it is new and secure with a bunch of similar people in it,” he says.
When I ask why the association didn’t buy somewhere a little less nice that people could rent for less, Downes says the rent “is very affordable”, and that anyone sharing and paying £800 a month would be committing 45% of the take-home pay on a £24,000 salary. This doesn’t seem to leave much for these would-be buyers to save for a deposit on a place of their own.
Downes believes his model is scaleable and that investors will come on board and allow the exercise to be repeated. FizzyLiving already has another development about to launch in Epsom, while parts of the athletes’ village nearby are expected to be offered for private rental. Research from Savills suggests there are 46 funds or institutions with £26bn available to invest in UK residential opportunities. That could be put into homes for a lot more rentysomethings.
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