Why Tenants Are Paying More: The Real Cost Behind England’s New-Build PRS Homes
England’s private rented sector (PRS) is transforming. Glossy new apartment blocks, modern co-living spaces, and purpose-built rental communities have become common sights in urban centers across the country.
These modern PRS homes offer tenants everything from on-site gyms and rooftop gardens to concierge services and digital tenancy management.
However, these added perks come with a price tag—and it’s increasingly evident that tenants in new-build PRS developments are paying substantially more.
Recent analysis reveals that modern PRS homes in England attract an average rent premium of 18% compared to traditional private rental properties.
While the amenities and finishes may be appealing, this premium has sparked a broader debate about affordability, value for money, and who these new developments are truly serving.
This article explores what’s behind this 18% rent premium, who benefits from it, and what it means for landlords, investors, and tenants in 2025 and beyond.
The Rise of Purpose-Built PRS in England
Over the past decade, England’s rental market has evolved rapidly. The traditional image of buy-to-let landlords owning converted Victorian terraces is now complemented by sleek, purpose-built blocks financed by institutional investors and managed by professional operators.
Purpose-built PRS homes are often located in city centers or regeneration zones and are designed to appeal to young professionals, digital nomads, and long-term renters seeking a higher quality of living.
This modern approach to renting is modeled on the US-style build-to-rent model, offering flexibility, modern infrastructure, and tenant-focused services.
The Government has also supported this shift by promoting PRS as a solution to the UK’s chronic housing shortage, especially in urban areas where demand outstrips supply. However, the arrival of this premium rental model has created a clear divide in affordability within the sector.
What Justifies the 18% Premium?
Let’s break down why new-build PRS homes are costing tenants so much more:
1. Amenities and Services
New PRS blocks typically come with a host of shared facilities such as gyms, co-working areas, lounges, cinema rooms, and 24/7 security or concierge. These extras enhance lifestyle and convenience but come at a financial cost that is passed onto tenants through higher rents.
2. Professional Management and Maintenance
Tenants in modern PRS developments often enjoy a more responsive and structured management experience. From app-based maintenance requests to well-kept communal areas, the entire resident experience is more polished than in traditional lets.
This level of service, however, adds to operating costs—and therefore, rent.
3. Location and Urban Regeneration
Many new PRS developments are built in revitalized city areas or strategic commuter hubs, offering great transport links and vibrant surroundings. Developers factor in the “location premium,” which is typically higher than the surrounding average rental prices.
4. Energy Efficiency and Modern Build Standards
These homes usually comply with the latest EPC and building regulations, offering better insulation, lower utility bills, and smart home features. While this can save tenants money in other areas, the rent charged reflects the initial capital investment required for such efficiency.
5. Shorter Voids and Higher Occupancy Rates
For investors and developers, modern PRS blocks often achieve faster occupancy and lower tenant turnover. This reduced risk and better yield potential allow landlords to command premium prices in exchange for offering quality, longevity, and stability.
Who Is Paying the Price?
While modern PRS homes cater to a niche demographic—typically young professionals with above-average incomes—their spread is affecting broader market dynamics:
Tenants:
Younger renters, particularly those who want to live alone or move into brand-new accommodation, are most exposed to the 18% premium. While some willingly pay for the lifestyle upgrade, others may find themselves priced out of city centers.
Landlords:
Private landlords owning older properties now face growing competition from institutional PRS schemes. To keep up, many are forced to upgrade, renovate, or lower their rents to stay competitive—placing pressure on margins.
Local Authorities:
Councils concerned with affordable housing face a dilemma: modern PRS homes may improve housing supply statistics but do little to assist low-income households.
Some regeneration schemes that prioritize PRS can inadvertently reduce the number of affordable units in a locality.
Is It Worth It? A Tenant’s Perspective
Whether a modern PRS home is “worth it” depends on the tenant’s priorities. For someone who values security, modernity, and services, the premium may be acceptable.
However, others may view it as unjustifiable, especially when traditional rental properties offer more space and flexibility at lower costs.
The key question remains: are tenants paying for true value or superficial upgrades and marketing spin?
Investment Trends: Why PRS Is Attractive to Developers
Despite the higher build costs and planning complexities, developers continue to pour money into PRS schemes. Here’s why:
- Secure Yields: Unlike speculative sales in the open market, PRS provides a steady income stream through long-term rentals.
- Institutional Backing: Pension funds, insurance companies, and investment trusts see PRS as a relatively safe asset class.
- Growing Tenant Base: The proportion of renters continues to rise in England, particularly among those under 40.
Moreover, many developers strategically design their PRS offerings to retain tenants for longer by building strong communities, hosting events, and offering referral bonuses. This builds loyalty—and helps justify the rent uplift.
Urban Planning and the PRS Premium
Urban planners and housing campaigners have voiced concerns that new PRS developments prioritize profit over affordability.
In some cities, this has led to “rental enclaves” where entire neighbourhoods are populated exclusively by high-end PRS schemes. Critics argue that this creates:
- Homogeneity in resident demographics (e.g., excluding families or low-income workers)
- Displacement of long-term residents
- Erosion of community identity and vibrancy
As a result, some local authorities are starting to demand mixed-use PRS schemes, incorporating affordable units, green spaces, and community facilities.
Future Outlook: Will the Premium Hold?
The longevity of the 18% premium depends on several factors:
- Supply Growth: As more PRS units come online, competition may soften rental premiums.
- Macroeconomic Pressures: Rising interest rates, inflation, and stagnating wages may limit how much tenants are willing or able to pay.
- Regulatory Intervention: Government scrutiny over rental affordability and housing standards may introduce caps or obligations affecting PRS operators.
- Tenant Awareness: With increasing digital transparency and tenant review platforms, landlords may be pressured to provide genuine value for money or risk vacancies.
Still, the PRS sector shows no sign of slowing down in 2025. While the premium may contract in time, particularly outside major urban hubs, a two-tier rental market—premium PRS vs traditional private lets—is likely to remain.
Conclusion
Modern PRS homes are reshaping the private rented sector in England. Their premium design, services, and lifestyle perks make them attractive to many tenants—but not without consequences.
With tenants paying up to 18% more on average, the rental market is becoming increasingly stratified, raising critical questions about affordability and long-term sustainability.
For landlords, the message is clear: adapt or risk obsolescence. For tenants, the choice hinges on what value they assign to convenience, modernity, and location.
And for policymakers, there is a pressing need to balance innovation in the rental sector with fairness and accessibility for all.
Frequently Asked Questions (FAQs)
What is a PRS home in England?
A PRS home refers to a property within the Private Rented Sector—typically rented out by private landlords or companies. Modern PRS homes are often purpose-built by institutional investors and come with amenities like gyms, concierge services, and communal spaces.
Why do modern PRS homes cost more?
Modern PRS properties carry an average rent premium of 18% due to their prime locations, professional management, added amenities, and new-build energy standards. Tenants pay for convenience, lifestyle, and design features not typically available in traditional rentals.
Are PRS homes only found in cities?
While most PRS developments are concentrated in major cities like London, Manchester, and Birmingham, the model is expanding into commuter towns and regeneration zones across England.
Do traditional landlords need to compete with PRS schemes?
Yes. Traditional landlords face competition from PRS operators and may need to invest in refurbishments, improve tenant services, or offer lower rents to attract and retain tenants in competitive areas.
Are PRS homes suitable for families?
Some PRS schemes are family-friendly and include larger apartments, outdoor spaces, and play areas. However, many are designed primarily for single professionals or couples, limiting options for families in some locations.
Will the 18% rent premium decrease over time?
Possibly. As more developments enter the market, supply could outpace demand in certain areas, putting downward pressure on rental premiums. Economic conditions and regulations may also affect pricing.
Can PRS properties help solve the housing crisis?
PRS homes contribute to increasing supply but typically target mid-to-high-income earners. Without the integration of affordable units, they may not directly address housing issues for lower-income renters.
Are PRS developments regulated differently than traditional lets?
Not significantly. While professional operators often self-impose higher standards, they are still subject to the same laws governing tenancies in England, including safety, repairs, and tenant rights.
How do tenants feel about living in PRS blocks?
Many tenants enjoy the convenience, community feel, and modern facilities. However, some raise concerns over high rents, lack of personalization, and rigid tenancy rules.
What should I consider before moving into a PRS home?
Review the total cost, including utilities and service charges. Understand the contract terms, compare against similar properties in the area, and consider what amenities you truly need versus what’s being used to justify a premium rent.
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