The Built to Rent (BTR) sector in the UK is enjoying impressive growth these days as new developments and deals are announced on an almost weekly basis.
But despite this building frenzy, there’s work to be done on how properties are marketed and priced if BTR is going to gain both popularity and market share.
The sector must overcome the traditions within the UK’s private rented sector that blur out the benefits of BTR. Remember, most units in the UK are provided by private landlords with small portfolios, often of just one unit, and that the country’s property marketing industry is now largely a slave to their idiosyncrasies.
For example, most tenants expect the quoted monthly rent on Internet Listing Sites such as Rightmove to be for just the space plus maybe some white goods.
But traditionally, who provides these utilities as well as other services such as broadband and satellite TV is up to the tenant and the landlord very rarely plays any part in procuring them.
The challenge for BTR is that too often its offering includes services such as broadband and furniture as part of the rent, and then expect tenants to understand that the property is more expensive than a comparable traditional unit because of these extra benefits.
But most tenants don’t get it, and so BTR properties are ignored or missed out as searchers flick through Rightmove looking for the best home within their budget.
Instead, BTR operators should be priced inline or marginally higher than traditional properties to get prospects through the door and then selling them bulk-bought additional services such as broadband, phone, satellite TV and utilities during the leasing process that can equate to 10-20% of additional income.
If operators ‘hide’ the benefits of BTR and advertise their properties in among the more traditional kinds of property, their advantage will be lost. If you promote these services as a ‘free’ benefit, your units are likely to be over priced and missed in the search process. Either way you’ll lose the value of what you’re offering.
Whether we like it or not, BTR homes must pass the ‘apples for apples’ comparison in tenants’ minds. But it doesn’t mean we must be same.
Let’s instead make BTR all about good service, something many landlords and letting agents in the UK struggle to provide in the traditional sector.
It’s how the market developed in the US during the 1990s and now most American Multifamily rental properties come with Service Guarantees. For example, they will promise to fix problems within 48 hours and then if they’re not remedied, the property in question becomes rent free until the problem is fixed.
Additionally we can offer bulked higher speed internet at a discount available the day they move in, personalized furniture packages, Sky at a discount, energy at a discount, renter’s insurance, an in home cleaning service and a smiling face always there.
It’s how the sector can demonstrate it is better than the ‘broken’ traditional model without increasing expenses or diluting rent, don’t you think?
Dustin Fjeld, Fjeld Consulting, creating value for PRS/BTR through process improvements, additional income streams, and the expense savings afforded to large unit concentrations.