Michael Weissman is legal director in the non-contentious construction team at law firm Howard Kennedy<\/i><\/b><\/p>\n
The UK’s build-to-rent (BTR) sector has evolved strongly over the past decade and last year achieved the milestone of 100,000 built homes. According to Knight Frank, investment in UK BTR exceeded \u00a35bn for the first time in 2024, the fifth consecutive record year for investment. In its Autumn Budget, the government announced \u00a33bn of additional support for SMEs and the BTR sector in the form of housing guarantee schemes to support the private housing market.<\/span><\/p>\n \u201cBTR projects can be a model for design, collaboration and good project management\u201d<\/span><\/p><\/blockquote>\n BTR has demonstrated a wide range of pull factors for contractors. The need to plan for long-term development means projects can be more design-led. New-build holds an appeal for end customers and provides the chance to demonstrate workmanship and design skills, build quality and finish. There is a focus on customer experience, as well as exposure to diverse target markets.\u00a0<\/span><\/p>\n While upfront spend can be higher than for other forms of development, investors favour reliable and consistent returns, increasing the availability of credit and forward funding. Development profits provide powerful commercial incentives for completion.<\/span><\/p>\n Contractors face difficulties and headwinds in this sector \u2013 where critical turning-point decisions such as the right land, geographical location and amenity space can make all the difference. Expectations to deliver quality end products that meet a range of third-party expectations are high, increasingly incorporating sustainable and socially nuanced living and wellbeing needs.<\/span><\/p>\n Regulatory pressures have come to the fore in the shape of changes to the building and fire-safety regime introduced following the 2017 Grenfell Tower tragedy. These bring with them increased risks of delays \u2013 the Building Safety Regulator (BSR) is currently dealing with well-publicised backlogs \u2013 and an elevated cost profile, and can have an impact on project viability. The requirements of regulatory sign-off, known as gateways two and three under the new BSR regime, and second staircases for tall buildings are notable examples.<\/span><\/p>\n Good planning (in line with national and local planning policy), programming, front-end design and engineering offer a path to mitigate the delays and cost overruns, but contractors will need to monitor these carefully. There is often also an attempt to pass a change in law risk down the contractual chain, which may need to be either resisted or negotiated.<\/span><\/p>\n Another important area to get right is specification, especially in the light of the market\u2019s widening tenant blend and the need for long-term functionality. Supply chain disruptions, insolvency risk, design changes, labour availability, material costs, ground and environmental conditions, uncontrollable events and payment risks present key challenges too, although not necessarily unique to BTR.<\/span><\/p>\n Interface with sales and marketing remains high on contractors’ agendas, particularly where elements of live projects are to be used for marketing. For example, contractors may be under considerable pressure to build show flats to precise parameters, or even to complete these to a superior level of finish and different space requirements. These works often need to be located and completed in advance of overall delivery to enable marketing to commence, requiring a further layer of programming.\u00a0<\/span><\/p>\n Developers may seek to apply specific contractual leverage for failure to complete these on time \u2013 so these provisions need to be properly negotiated and calibrated, including any potential damages. Contractors also need to be aware of which areas may need to be accessed earlier than others and coordinate with the rest of the works. Appropriate arrangements for site access, health and safety, insurance, site security, maintenance and cleaning should all be pre-agreed.<\/span><\/p>\n In the drive to finish construction, managing any future defects sometimes gets pushed down priority lists. Arguments about snags and defects have the potential to become highly charged. Re-charges for rectification work done by others can knock contractors\u2019 cashflow out of balance. Lines of communication between residents, owners, management companies and contractors may be blurred or duplicated. Contractors should generally resource their teams so that they are ready to monitor and respond to these situations within the agreed timescales.\u00a0<\/span><\/p>\n Some of these issues can be eased by traditional steps such as early due diligence, construction security, leveraging good long-term relationships, cascading to subcontractors and suppliers, agreeing suitable payment schedules, good project management, change control, and proactive communication with stakeholders and site teams. Contractual protections and reliefs should be established to help alleviate contractors’ concerns in these areas.<\/span><\/p>\n BTR projects can be a model for design, collaboration, good project management, innovation, risk mitigation, build quality, the built environment, and social and environmental value. To deliver projects on time and on budget, familiarisation with the potential risks and mitigants is important \u2013 as is agreeing how to deal with these.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":" Michael Weissman is legal director in the non-contentious construction team at law firm Howard Kennedy The UK’s build-to-rent (BTR) sector has evolved strongly over the past decade and last year achieved the milestone of 100,000 built homes. According to Knight Frank, investment in UK BTR exceeded \u00a35bn for the first time in 2024, the fifth …<\/p>\n","protected":false},"author":1,"featured_media":514696,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false},"categories":[547],"tags":[],"yoast_head":"\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\t\n\t\n\t\nGetting everything agreed<\/h3>\n