What can data tell us about tenant renewals?

By 2032, build-to-rent is projected to represent 8% of the UK rental market, a significant milestone for a sector that will have just about 15 years of growth by that time. Investment is surging, with over £5 billion of capital funneled into the market in the 12 months leading up to Q3 2022. This influx underscores the sector’s vitality and the burgeoning interest in build-to-rent as a robust component of property investment.

The challenge of tenant renewals remains prevalent, posing questions about the stability of rental income and the strategies to mitigate void periods in properties. For instance, a build-to-rent property with 380 units could incur up to £500,000 annually on turnovers, highlighting the financial implications of not addressing void management proactively. Operators and management companies continue to grapple with the lack of real-time insights into tenant behaviour, a gap that, if filled, could significantly enhance strategies for reducing void periods.

Understanding tenant behaviour through data can revolutionise how properties are managed, directly impacting tenant satisfaction and the duration of void property. Build-to-rent properties are rich sources of data, from the usage of on-site amenities like gyms and co-working spaces to interactions with maintenance staff. These data points are crucial in forming predictive models about tenant renewals, preferences, and their response to potential rent increases.

The intelligent analysis of tenant behaviour and facility usage can inform strategic decisions, improving void management and enhancing tenant retention. Predictive models based on comprehensive data collection can offer insights into which tenants are likely to renew their contracts and how changes in the property or its management could influence this decision.

For property managers and operators in the build-to-rent space, embracing a data-driven approach is no longer optional but a necessity to stay competitive. This involves not only understanding the factors that drive tenants to renew their contracts but also integrating advanced financial and valuation models that take into account the vast array of data points available. Reducing turnover and effectively managing void properties can significantly influence the financial performance and market position of build-to-rent properties. The evolution of data-led strategies, including sophisticated void management techniques, marks a new era in the build-to-rent sector, promising a more informed, efficient, and tenant-centric approach to property management.

It’s vital for property managers and operators to start thinking about the following:

• What factors drive tenants to renew
• The use of comprehensive models for BTR property finances
• Valuation models and the use of data to predict tenant behaviour
• The overall effect decreasing turnover has on BTR properties
• The evolution of data-led procurement in the build-to-rent space

If you’re seeking strategic advice for your build to rent, purpose build student accommodation or private rental sector building you can contact us here.