Transitioning between property developers and property operators doesn’t always go as planned. Any miscommunication can lead to issues arising. And when things do go wrong, it’s usually down to a lack of understanding about the build-to-rent process. The concept is still in its infancy in the UK, meaning problems can arise due to inexperience in the sector. With that in mind, we look at how to spot pitfalls and ensure a seamless transition from the developer to the operator at your build-to-rent units.
Build-to-rent, co-living and purpose-built student accommodation all require smart and intuitive systems to run the building, from managing tenants to fire safety options. Yet, many early mistakes centre around purchasing poorly-designed closed protocol equipment controlled by the manufacturer.
In essence, it means the owner of these operating systems plays a key role in how they function and is also required for actions like updates and expansions. It’s anything but a fluid process for the building operators who rely heavily on manufacturers.
In many cases, staff at the building have restricted access to parts, software and even training. They are wholly reliant on the closed protocol equipment without having complete control over how it works in the building. Handing over too much authority to the developer of these systems while relinquishing it yourself can have long-term effects on operations and costs.
Essentially, if the equipment isn’t optimal for the site, you will need to spend a significant amount of money replacing it.
Building management system
The building management system (BMS) is arguably the most crucial aspect of a well-run build-to-tent setup. But if proper checks aren’t conducted, your team could find themselves booting up a poorly configured system.
We’ve encountered previous issues in build-to-rent communities, including a BMS set to test mode and starting up in override mode. Ultimately, signing up for a BMS that isn’t optimised for your specific building could end up in a situation where a system in place provides incorrect information about the building.
Untested (or unknown) water tanks
Do you know where every water tank is located in the building? Have they been tested and checked for legionaries? You’d be surprised by the number of buildings taken over by the operations team without being aware of the location of water tanks.
Even worse, if these tanks lead to an outbreak of legionnaires disease, your operations company can find itself in hot water. Compliance and safety checks are vital to the smooth running of the building, and you need to know where every tank is located so that it doesn’t pose problems for tenants.
Incorrect energy meter readings
An energy meter displaying the wrong information can cause significant problems at any time. But it’s particularly relevant given the increasing cost of energy bills. Therefore, the last thing you want in your build-to-rent community is for tenants to receive the wrong bills for energy they haven’t used.
Before setting up, you need to ensure that energy meters are functioning correctly and connecting the meter readings with the correct address. Otherwise, you’ll have unhappy tenants complaining about their bills and feeling dissatisfied with the service offered in the building.
There are a whole host of reasons why generators can fail and cause problems in a build-to-rent property. Finding an un-maintained generator when taking over a building can lead to several issues, including power outages for the entire property.
When you take over, every little detail falls under your remit. This means you could find yourself fixing power issues due to a poorly-maintained generator and paying thousands to solve the problem while ensuring minimal disruptions in the building. Even if there are backup generators in place, the fallout from these issues can see you lose tenant trust and spend large sums fixing the problem.
You can anticipate some issues when taking over a building, but many of these can be mitigated with a warranty. Yet, if those warranties are untenable, you’re left with the responsibility of fixing problems around the building without having guarantees in place.
There can be scenarios where you move into the property, and it’s all running smoothly for 12 months. Then, out of nowhere, a maintenance problem arises, and you don’t have access to any documentation, including the warranty. The result is spending hundreds (if not thousands) of pounds fixing something that has a warranty – you just can’t prove it.
Other common handover headaches
- Unidentified assets – it’s impossible to manage systems correctly if you’re unaware of them
- Statutory non-compliance – most buildings have statutory compliance hurdles, which can be missed without the correct oversight
- Overpriced or poorly written service contracts – standard service contracts from providers vary and typically don’t contain warranty support, key performance indicators or satisfactory service level agreements.
How to avoid pitfalls
Taking over a build-to-rent property or similar building is a complex process that requires due diligence. But with so many moving parts, it can prove tricky trying to ensure all operations go off without a hitch.
Working with a company like Fjeld Consulting can stop these problems from arising through building takeovers with our Soft Landing product. Tapping into knowledge from the US multifamily market, plus extensive experience in the UK, we conduct an overview of the entire operational process and spot issues typically missed during the transition period, such as ensuring all assets have a maintenance plan.
Fjeld Consulting Soft Landings equips management teams with an array of tools, such as:
- Digital asset registers
- Supplier maintenance asset real-time tracking (SMARTT)
- Planned preventative maintenance contracts with competitive rates
- Enhances service level agreements and KPIs to monitor and manage vendor performance
- Property portal and business intelligence reporting
- Digital contract database
As a result, your operations team can take over the building, confident that everything is set up for a smooth transition. And a well-run building with proper checks and balances in place leads to increased tenant happiness, higher retention rates and less hassle, leading to long-term success for your operations team.