The Private Rented Sector’s Premium Price Tag
England’s Private Rented Sector (PRS) is undergoing a transformation. Gone are the days of ageing stock, worn-out furniture, and a ‘take-it-or-leave-it’ approach.
In their place, a new generation of sleek, fully managed, amenity-rich rental developments has emerged – and they’re coming at a price. Recent data shows that modern PRS homes now command an 18% rent premium over traditional rental stock.
This premium, while reflecting upgraded living standards, has sparked debate across the industry. Are these modern developments genuinely offering value for money, or are tenants simply paying extra for a façade of luxury and convenience?
And what does this shift mean for landlords, investors, and renters trying to navigate an already pressured market?
What Are Modern PRS Homes?
Modern PRS homes—often referred to as “Build to Rent” or “New-Build Rentals”—are purpose-built properties specifically designed for long-term renting. These developments are typically owned and managed by institutional investors or property firms rather than individual landlords.
What sets them apart? Modern PRS homes commonly feature:
- On-site concierge services
- Communal lounges, gyms, and co-working areas
- Smart tech integration
- Flexible leases
- In-house maintenance teams
- Pet-friendly policies
Most importantly, these homes are marketed not just as a place to live, but as a lifestyle offering. Tenants are promised community living, added security, and predictable service levels that often exceed traditional rental standards.
Why Are Renters Willing to Pay More?
The 18% rent premium is a significant margin, especially in a market already struggling with affordability. So why are renters embracing it?
Lifestyle and Convenience
Younger professionals and relocating city dwellers are increasingly opting for convenience over cost. Living in a modern PRS development means fewer responsibilities, fewer maintenance hassles, and more time to focus on work or leisure.
Amenities on Demand
From rooftop terraces to yoga studios and event spaces, these homes offer much more than a four-walled unit. Tenants are effectively renting an experience, not just a space.
Certainty and Professionalism
Unlike the private landlord model, where service levels vary widely, modern PRS schemes offer centralised management, clear processes, and often 24/7 support.
Urban Proximity
Many new PRS schemes are located in revitalised city centres or major transport hubs. Their premium location alone contributes to higher rent figures.
Who’s Driving the PRS Boom?
The emergence of modern PRS homes is largely driven by institutional investors, pension funds, and large property development firms. These players are betting on long-term, predictable rental income streams rather than short-term sales profits.
Cities like Manchester, Birmingham, Leeds, and London have become hotspots for build-to-rent growth. Local authorities are also more receptive, as modern PRS homes often align with urban regeneration goals, support local job creation, and ease housing shortages.
Is It All Just Marketing Gloss?
Critics argue that while modern PRS homes look good on paper, not all schemes deliver on their promises. Some common complaints include:
- High Service Charges: Many tenants are surprised by the extra monthly fees for amenities, even if they don’t use them.
- Standardised Living: Apartments may look modern but often lack character or flexibility.
- Lack of Ownership Path: Renters in these schemes rarely have options to transition into ownership, potentially creating long-term rental dependency.
Additionally, there are concerns that the 18% rent premium is pricing out lower-income tenants from quality housing in urban centres, pushing them further into fringe areas.
Implications for Traditional Landlords
The rise of modern PRS homes presents both challenges and opportunities for traditional landlords.
Threats:
- Competition on Quality: Dated rental stock with poor management will struggle to compete.
- Rising Expectations: Tenants now expect faster maintenance responses, smart features, and flexibility in contracts.
- Downward Pressure on Rents: In oversupplied markets, traditional landlords may have to lower rents or invest in upgrades.
Opportunities:
- Differentiation: Smaller landlords can offer personal touches, flexibility, and community familiarity that large schemes cannot.
- Upgrades Pay Off: Investing in smart upgrades, fresh décor, and energy efficiency can enable traditional landlords to capture a portion of the premium without undergoing full-scale redevelopment.
Impact on Rent Affordability
One of the biggest criticisms of the 18% premium is that it exacerbates the housing affordability crisis in England. The average rent in many cities is already above 30% of the median household income. An 18% hike places added pressure on renters, particularly amid rising inflation and stagnant wage growth.
While modern PRS homes may serve the higher end of the rental market, they do little to address the needs of:
- Low-income families
- Young people trying to save for deposits
- Key workers unable to access affordable housing near their jobs
Some councils have started to explore inclusionary zoning—requiring PRS schemes to include a percentage of affordable units—but implementation remains patchy.
Will the Premium Persist?
Market analysts are divided. On one hand, the PRS model is still relatively new in the UK, with demand continuing to outpace supply. As more schemes launch, some predict competition could drive down the premium.
However, if the cost of land, materials, and professional management continues to rise, developers may need to maintain or even increase rents to remain profitable.
What’s clear is that quality, convenience, and certainty are becoming core expectations among modern renters. Whether they are worth 18% more is ultimately decided by personal values and priorities.
Is the PRS Model Here to Stay?
Yes—most signs point to continued growth. According to the British Property Federation, the Build to Rent sector has seen over 85% growth in the past five years, with tens of thousands of additional units in the pipeline.
The UK government has also indicated support for professionally managed rental stock as a long-term housing solution. This may lead to:
- More favourable planning policies
- Tax incentives for institutional landlords
- Greater regulation to protect tenant rights
Traditional landlords should keep an eye on policy changes, tenant expectations, and local competition to stay competitive in a shifting landscape.
FAQs
What does “PRS” stand for?
PRS stands for Private Rented Sector, referring to properties privately owned and rented out rather than council or housing association homes.
What makes a PRS home ‘modern’?
Modern PRS homes are purpose-built rental properties featuring amenities such as concierge services, co-working spaces, gym access, innovative technology, and full-time maintenance teams.
Why do modern PRS homes cost 18% more in rent?
The premium reflects high-quality amenities, desirable locations, professional management, and added convenience for tenants.
Are all modern PRS developments the same?
No. Quality, services, and fees vary significantly between developers. Some offer genuine value; others are more style than substance.
Do tenants pay extra fees on top of rent?
Yes. Many modern PRS homes come with service charges or amenity fees that are separate from the advertised rent.
Can traditional landlords compete with modern PRS?
Yes, by investing in upgrades, providing responsive service, and maintaining flexible lease terms, traditional landlords can remain competitive.
Are there any risks for tenants in PRS homes?
Risks include unexpected service charges, lack of control over tenancy changes, and potential rent hikes at renewal.
Are these properties better for families or singles?
Most modern PRS schemes cater to young professionals and singles, though some developments now offer family-friendly layouts.
Do these homes help with the housing crisis?
Not directly. While they increase supply in urban centres, they rarely provide affordable housing options for lower-income households.
Is the 18% premium likely to rise?
It may fluctuate depending on local demand, interest rates, planning approvals, and build costs. In the long term, competition may lead to reduced premiums.
Conclusion
The 18% rent premium associated with modern PRS homes in England reflects a clear shift in the rental landscape. Tenants are increasingly seeking hassle-free living, lifestyle benefits, and modern standards that traditional rentals often lack.
While this premium may not be sustainable across all regions or economic conditions, it currently highlights the value renters place on quality, consistency, and comfort.
However, as this trend grows, the risk is a widening gap between those who can afford premium rentals and those left behind in an already strained housing system.
The future of the PRS will depend on how well the sector balances innovation with inclusivity and how traditional landlords adapt to meet rising expectations.
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