How build to rent is changing the face of Norwich
- Credit: Denise Bradley
A new wave of house building is altering the local landscape as property investors favour putting their money in cities like Norwich.
Currently, the rental market is being fuelled by this investment coming out of the capital and larger areas as a result of Covid.
A report on the UK's rental market published earlier this month by Zoopla found rentals rose by 3pc in 2021 outside London compared to the previous year and fell by 9.4pc in the capital.
Prices being achieved on average a month for rents in Norwich are as high as £996, compared to £922 for the East of England.
Norwich’s big transformation started years ago with the development of the Riverside seeing a shift of purpose from industry to leisure.
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Old eyesore warehouses which had lain derelict for years were suddenly snapped up, ripe for conversion into homes.
‘Lock up and leave’ became a popular catchphrase with people suddenly freed from the chores of maintaining a large house and garden at the weekends.
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Instead, living in an apartment meant going to the theatre, restaurants and on holiday more.
And for those building apartments was a cash-rich target market in the form of the ‘dual income, no kids’ couples and retired folk downsizing from large country homes.
But the apartment bubble began to burst in Norwich with a glut of developments that were too big and consequently took years to sell.
Investors shifted to backing the building of flats for the city’s growing student population instead with enormous schemes such as Pablo Fanque House and All Saints Green.
Meanwhile developers went back to the drawing board rethinking design after criticism over soulless conversions that agents found tricky to market.
But recently, Norwich has benefited from huge investment in property again which began with Brexit scaring off overseas buyers in the capital and then as a result of Covid.
People fled London and big urban areas and suddenly large firms saw the potential of backing building in the provinces.
But rather than building to sell, they’re doing it for rent only because of the monthly prices achieved and the long term gains.
But what’s the impact on a city like Norwich?
Phil Cooper, lettings manager at property agents Arnolds Keys, said it’s a more ‘healthy’ situation to have a mixture of owner occupiers and tenants in one development.
“It normalises the relationships. Landlords – not tenants – pay the same service charges as owner-occupiers, and it’s a myth that rental properties are not looked after as well as those lived in by owners.
"Of course there are tenants who don’t look after their properties, but that can be equally true of owners. It’s not a question of tenure, but attitude.
“However, there is currently a significant mismatch between supply and demand – there are far more tenants looking for homes and it is this which is putting upward pressure on rents.
"This demand is attracting investors into the market, which is welcome, but not in the numbers required to create a level playing field. The only way that we will see the market achieve parity is if the supply increases.
“With house prices rising fast, the demand for rented homes is unlikely to diminish any time soon, so there is a pressing need for more rental homes.”
More than £1.2 billion was invested during the first quarter of 2021 in building accommodation in the UK purely for the rental market - the highest on record.
In Norwich, it’s a growing trend – 37 new builds have been created on a former shoe factory site in Duke Street ranging up to £1,165 a month and nearly all are let.
Others are in the pipeline such as 44 apartments being converted from the Vantage House office block, off Pottergate, which will be priced from £800 a month.
Fuelling this growth is a new type of renter; someone who chooses to do so, not forced into it because of lack of funds for a mortgage.
Jamie Minors, who runs Minors & Brady estate agents, said: “We still have investors purchasing properties for capital growth, not just for monthly returns.
"Rental prices have increased, and continue to increase. Norwich’s popularity is booming. Our city is clean, with an amazing quality of life, direct access to London, beautiful scenery and of course a huge coastline.”
Recent schemes include 37 new builds in Duke Street, on the site of a former shoe factory, available for rental only.
Only a handful of the properties over three floors, some with roof terraces and all with balconies or a courtyard garden, are left with rents agreed from £725-£1,165 a month.
Meanwhile another build to rent development is created in a former 1960s office block, Vantage House, off Pottergate over four floors available for rental only from around £800 per calendar month.
Only the top floor is going to be available for the purchase of four penthouses.