PRS puts premium on new developments

New private rental developments beginning to be marketed around the UK are charging premiums of up to 47% on the local average, Estates Gazette analysis can reveal. A comparison of asking rents for some of the most high-profile schemes, including Essential Living’s redevelopment of the Archway Tower, N19, Grainger’s Abbeville apartments in Barking, east London, and Delancey’s East Village, E20, found rents can range from 16% less than the local average to 47% more. In Archway, Essential Living is advertising asking rents of nearly £2,000 pcm for a one-bedroom flat. In Newham, Red Door Ventures, the council’s private rental company, is charging £1,200 pcm for a one-bed flat, 31% more than the local average. Many developers are banking on being able to command a higher level of rent than local levels to make schemes financially viable: high land costs mean yields for schemes are often prohibitively low. The professional service and product offered are also expected to justify the higher asking rents. However, depending on the model, there has been a highly variable level of cost. While some operators are looking to provide a premium product, others are following a no-frills business approach. Research from Colliers International at the beginning of the summer suggested that rents are on average 10% higher in professional blocks around the UK. However, the premium commanded may concern some councils which argue private rental developments are not affordable. • To send feedback, e-mail alex.peace@estatesgazette.com or tweet @egalexpeace or @estatesgazette