Rent To Rent: Young Entrepreneurs Rent Properties To Sublet 

Alex Watkins is a father of three who has three jobs, but estimates it will be years or even decades before he and his partner Jenny Knowles can afford to buy on their current income.

In contrast, the family found out that their last landlord owned the entire street, and the family have become politicised by being on the wrong side of Britain’s ownership divide.

Furthermore, renters who want to own are also competing for properties with those who already hold property portfolios and are buying more in a game of Monopoly that renters cannot win.

Britain’s buy-to-let boom

Bricks and mortar are not only where most Britons’ wealth is stored, but also the biggest single business type in the country. In Britain, there are currently 4.5 million investment properties and this year buy-to-let firms became the largest single type of business registered on Companies House, according to the estate agent Hamptons.

In February, the number of these firms surpassed 400,000 and there has also been an increase in huge institutional buyers, such as hedge funds and investment banks like BlackRock, acquiring thousands of homes.

For smaller investors, the buy-to-let boom started in the 1990s, with changes to tax and tenancy laws which were further incentivised by low interest rates in the 2010s on new buy-to-let mortgages. However, recent reforms and rate rises appeared to make buy-to-let business less lucrative and even loss making, whilst increasing barriers of entry for young and new investors with less capital to spend.

The need for a lump sum deposit meant that property concentrated in the hands of older people, with over half of buy to let properties being held in the hands of those over 60.

However, property ownership has become an obsession for a new generation on social media, and young entrepreneurs told Channel 4 News they see property as the most accessible way to achieve financial security in low growth Britain and so are attempting riskier methods to acquire properties.

The ‘rent-to-rent’ social media craze

27-year-old entrepreneur Ezekiel Bademosi once earned £1,500 a month working with special needs children before being swept up into the world of ‘rent-to-rent’.

“For someone who had big aspirations, that’s nowhere near enough, and that’s when I stumbled across ‘rent-to-rent’, and that’s exactly what changed my life.”
– Ezekiel Bademosi

The investor claims he currently rents 23 properties which he sublets,  known as ‘rent-to-rent’, which has become increasingly popular with young investors.

In ‘rent-to-rent’ speculation, property investors first rent properties and then sublet that accommodation at a markup on platforms like Airbnb, or directly to emergency housing providers like charities or local authorities.

“The amount of families that I’ve accommodated, I’ve helped a lot of families in multiple different situations. Some of my properties, I work with social housing companies,” said Ezekiel.

‘Rent-to-rent’ is the way new and young property speculators can raise the capital to buy an investment home. Ezekiel has now managed to redirect the profits made from subletting into buying his own investment property in the north of England, where housing is considerably cheaper than London, where he lives.

“When we were looking at London, for a one-bed flat, we were looking at about £300k, so for us we thought we would come up north. The price of [our] four-bed house was actually £137,000, so for us it made more sense,” he said.

Ezekiel and his business partner Clinton Asumah have acquired the four-bed property in Huddersfield to  convert into a six-bed house of multiple occupancy, known as an HMO. In an HMO, landlords rent to individual tenants who are often strangers.

“You can rent out an individual house and make £300 or £400. We are doing this as a HMO and we will make triple that amount of profit.”
– Clinton Asumah

However, 10 minutes from Clinton and Ezekiel’s new HMO, that will charge £600 per room, are families who say they have seen an increase in rents which they attribute to property speculation.

Families feel impact of speculation on rents

Alex Watkins and his partner Jenny Knowles are young adults with three children. Alex works full time and when their youngest was born the entire family were issued with a no-fault eviction just days ahead of the birth.

“I’m more than happy for people to come and live here [in Huddersfield]. I love the mix of cultures that we have here, but if it’s literally just to turn a profit and exclude the people that already live here, then it’s just selfish… if you’re making your money from something as basic as a place to live, I don’t think that’s an ethical way to make money,” said Alex.

The family are concerned that investors flooding into the town will force residents out of Huddersfield and believe that the cost of rent has been part of the town centre’s decline by eating into the disposable income of families like theirs.

They say a family activity could cost them up to £70 and would require weeks of saving to afford.

“We’ve had people talk about the fact they’ve had to move out of Huddersfield because they can’t afford it anymore… the other businesses are failing because people are not going out and spending money and it’s a downward spiral for the whole community,” said Jenny.

“If you’re making your money from something as basic as a place to live, I don’t think that’s an ethical way to make money.”
– Alex Watkins

The cost of rent is usually considered a problem in cities like London and Bristol, but Alex and Jenny say there’s even an affordability crisis in Huddersfield, where the cost of a three-bed house can be 80% cheaper than the capital.

The family say they cannot afford to pay the amount landlords are asking for in Huddersfield and were only saved from homelessness by a family friend offering them a rate below the market.

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