Tax VAT liabilities need to be factored into both development and ongoing management costs through careful planning and financial structuring. Stamp duty land tax (SDLT) rules can also impact the market depending on the nature of the transaction and whether exemptions may be used. Planning obligations Working closely with local authorities to avoid restricted use of private rented BTR through the use of covenants can be helpful. Institutional investors should ensure there’s no restriction on trading, negotiating more flexible assurances such as ‘buy-outs’ and a phasing of any agreed obligations relating to developments. Construction and operational expertise Highly specific construction contracts are necessary for institutional funders, with construction and design partners fully responsible for the success of the scheme, not the development organisation. Management of tenants in a letting scenario requires provision from third party management with policies needed to cover all operational demands. Finance There can be restricted access to finance due to capital being tied up in long-term BTR developments. Some developers may also struggle to compete with buy-to-sell developers for prime sites. Challenges in the sector Real Estate Investment 2022 24