How to unlock Built to Rent’s UK potential

Understanding Build to Rent (BTR) and Its Impact on the UK’s Private Rented Sector (PRS)

The Private Rented Sector (PRS) and Build to Rent (BTR) have gained notable coverage in the UK’s business press, yet the general public’s understanding of the burgeoning built to rent sector remains limited, despite the occupancy of the first units. This article aims to shed light on the build to rent developments and their potential to revolutionise the housing experience for the UK’s 4.3 million private renters.

The US vs UK Rental Experience: A Perspective Shift

The paradigm shift in rental experiences, a norm in the US, is now beginning its journey in the UK. Many Americans, accustomed to the more developed built to rent sector in the US, find the UK’s rental market, dominated by single-property private investors and managed by letting agents, surprisingly inconsistent and often of subpar quality, particularly in expensive locales like London. This scenario is viewed as a ripe opportunity by astute investors familiar with the US and European build to rent or ‘multi-family’ sectors. Major players like Greystar,Atlas Residential, the Canada Pension Plan Investment Board, and LetterOne Treasury Services are already capitalising on this.

In certain sub-markets, BTR/PRS is already a formidable force. Institutional investment in UK student accommodations, a segment of the built to rent homes market, has seen a meteoric rise from £250m in 2005 to an estimated £6bn in 2015, according to a Cushman & Wakefield report. However, the entire multi-family sector, including purpose-built student accommodation (PBSA), faces a significant digital hurdle in distinguishing itself in an online search market dominated by major portals like Rightmove and Zoopla, which often fail to highlight the unique selling points of multi-family properties.

The Road Ahead for Build to Rent Schemes

Addressing the digital challenge begins with striving for a more balanced tenant/landlord relationship and advocating for transparent property management to enhance service quality. Despite the legal protection for fair tenant treatment in the UK, enforcement by local councils is lax. Leveraging reviews and ratings can significantly differentiate build to rent schemes from the rest of the market.

The future of property rental and management is likely to align more with platforms like Airbnb or TripAdvisor, known for their transparency and user-generated reviews, contrasting sharply with the opaque service quality often associated with traditional models like Rightmove.

The challenge lies in convincing these major portals to acknowledge that build to rent developments offer a distinct proposition, focusing on superior property management and enhanced personal and communal amenities, with the added advantage of review and rating systems for property management teams.

Persuading the Portals and Preparing for Market Evolution

While portals like Rightmove and Zoopla are not averse to change, having adapted to market shifts in the past, the build to rent sector might need to flex its marketing muscle to influence the operational models of these property portals, just as internet-only agents have done. With 60,000 units in the pipeline (British Property Federation), the tipping point for build to rent may be closer than we think.

About the Author: Dustin Fjeld

Dustin Fjeld
As founder member of Fjeld Consulting, Dustin has helped save clients thousands across a range of BTR, PBSA, PRS and Co-living portfolios.

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