Reach & Retain
The UK build to rent (BTR) sector has been steadily growing year on year, and there are now almost 100,000 homes either completed, under construction or in planning – a increase of almost 40 percent recorded in the first quarter of 2017 according to research produced by Savills for the British Property Federation. The size of BTR developments has also increased significantly, with 34 developments currently in the pipeline set to provide over 500 new rented homes each, up from only 24 developments of 500 properties or more in the first quarter of 2017.
These statistics follow a number of announcements from the Government – putting BTR at the heart of UK housing policy. The Government is set to provide a funding boost of £65 million to Wembley Park’s development of homes specifically built for private rent, and a new report suggests over 240,000 homes could be delivered by 2030. Asset management giant Legal & General has also backed BTR with an announcement that it has moved forward with its BTR scheme in Walthamstow – providing yet further validation of this nascent sector. But what is causing this surge in BTR?
The swell in BTR developments continues as renting establishes itself as the new norm for millions of people in the UK. The rise of house prices in urban areas, combined with a lack of new homes for first-time buyers means that many aren’t even considering homeownership. ‘Generation Rent’, however, still values stability and community – two things normally associated with house buying. This is why we have seen the rise of co-living among 20 somethings; individuals can see the appeal of living with like-minded people in properties where they share communal spaces but have access to high quality amenities that wouldn’t be available for a similar cost in a traditional property.
Your Move research shows that renters are becoming more interested in longer-term tenancies, assuming landlords provide suitable living spaces and services. This is being put into practice by Get Living London who are offering “the security of a three-year tenancy, the flexibility of a residents-only break clause and, the freedom to decorate” so renters can “really feel at home”.
So, what can BTR providers do to ensure their properties are the ones that attract long-term, loyal tenants?
They need to look closely at what makes their target demographic tick. Together with Say Property, the Conductor team surveyed 1,000 renters and 80 industry participants to understand what renters really want in comparison to what the industry thinks they want. The findings show that 87 percent of renters would pay more for additional services compared with 90% of the industry who thought the same. However, when the priority services – such as fast WIFI or access to a gym or swimming pool – are compared, there are some real discrepancies between what industry believes renters want and what they actually want. There is no point in developers investing heavily in certain goods and services if they are not going to be valued by the target market.
Technology comes up in conversation with developers time and time again, with generation Z – the ‘digital natives’ – entering the market, developers are unsure how much attention to give to technology. We considered this generation and its potential to impact the housing market in a previous article, and we understand that although technology is often used nowadays to facilitate connections, humans ultimately crave face time. Technology, should of course be considered, but it should move from taking centre stage to a supporting role, used to enhance the customer experience, rather than replacing face to face interactions, we call it “thoughtology”. Developers need to implement cross sell strategies that draw in individuals, especially Gen Z, through technology and followed-up with conversations that place the customer at the centre of the process.
Operators will also be more successful securing those longer leases if they work to facilitate a sense of community with likeminded individuals, involving tenants and helping them to put down roots. This doesn’t have to be by investing in expensive amenities, and can be as simple and thoughtful as community manager notice boards or creating an in inviting central hub for social interactions to naturally take place.
Through understanding and acting on renters’ behaviours and habits, BTR providers who wish to create value from yield in the medium to long term, will be better able to build loyalty and increase retention rates. There needs to be a shift from brand equity to customer equity – the latter being placed at the core of the marketing and lettings strategy. Reach & Retain is a workshop run by Conductor, that develops strategies to do just this.
With investment into the build to rent sector expected to skyrocket by 180 percent in the next six years – it will be the savvy developers who take the time to understand changing customer wants needs – that will ultimately succeed.