In this piece, Katherine Rose, managing director of VervLife, explains why Build to Rent (BTR) operators may want to consider switching to single family BTR to increase the value of their operations.
Professionally managed rental housing, or what we now know as single family BTR, is not a new residential asset class. However, it’s definitely in vogue right now with investors and developers looking to take advantage of the changing dynamics of the housing market toaccess long-term, stable returns.
With the number of people renting on the rise, catalysed by the continued housing affordability crisis, greater geographic mobility and slowly but surely evolving attitudes towards renting here in the UK, growing numbers of families looking to rent are opting for professionally managed houses to set up their homes. The UK also significantly under indexes in rental housing stock (7% of available housing) when compared to Europe (15%), so there’s clearly sustained scope for the market to absorb such product.
With many developers and housebuilders now turning to MMC as a means of constructing lower carbon homes quicker without compromising on quality, single family housing can also align with the unsatiable desire of institutional and increasingly private capital to invest in projects with robust and demonstrable ESG credentials.
But whilst single family BTR opportunities offer investors the chance to viably diversify their BTR residential portfolios away from multi family blocks, they must be operated very differently from the latter in order to maximise return on investment and annual yield in a world where strong resident retention and satisfaction is key to driving net operating income.
Residents in rental housing should be managed in a unique way versus those occupying a multi-family block. It is up to the operator to work even harder to prove the value of renting to their managed residents, as often their next door neighbour may be an owner-occupier.
The potential for this understandable compare-and-contrast mentality to cause retention issues, owing to the proximity of those renting and owning similarly if not identically specified houses, is something operators need to be switched on to and move to mitigate through exemplary resident experience.
Residents and communities will also perceive value in distinct ways when they are occupying a rented house. Data from Homeviews shows that of all of the amenities and services offered to a resident in a typical multi-family BTR block, the three facilities that correlate most strongly with higher value scores are concierge, a resident events schedule and swimming/spa facilities. All of these are services that whilst not theoretically impossible to deliver in a typical single family rented community setting, are certainly less viable to deliver than in a modern rental block.
So then, how can operators set about delivering enhanced resident experience and community activation on today’s modern rented housing schemes, and how can the ‘rental premium’ translate into the world of single family BTR?
A good place to start is by supporting rental residents to live in a new-build home to attain the ‘home ownership’ experience but in a more flexible, simpler way.
For example, it’s incredibly important early on to reduce any potential anxiety connected with moving into a new build home by tending quickly to any snagging or ongoing maintenance issues, all at the touch of a few buttons through a residents app, which won’t be available to those owing their homes.
Garden maintenance is another area to focus on, and working with individual residents to understand their preference is key here; some may welcome a monthly tidy-up by an external contractor, however more green fingered residents will want to do it themselves.
Houses are self-contained with no direct access to shared amenity areas, so the design of such schemes is also critical if the conditions are to be put in place for community to flourish. An amply sized communal green area that can host events such as a summer fete and BBQs, and perhaps a clubhouse for residents to use for a multitude of purposes from birthdays to charity coffee mornings, are also good ideas to demonstrate value to residents and provide spaces which the community can utilise.
But with a dedicated, professional concierge service being most closely associated with value by residents in multi family BTR, how can single family BTR replicate this physical resident service in an environment with no shared concierge desk and no 24/7 access to in-person support?
An intuitive, user-friendly resident app is even more essential in a rented housing community than in a block, precisely because of this lack of immediately and consistently available concierge. As housing schemes are suburban in nature rather than located in city centre locations, the curation and directory of local amenities and partners should also be given extra care and attention, particularly to help those moving into the area to navigate their new communities. Families will also share different interests, and so it’s important to get to know each family’s preferences through well managed data collection and intelligence.
Some residents will always seek face to face interaction. That’s why as an operator it is important to work with developers and builders of single family BTR to incorporate spaces where the management team can base themselves whilst on-site, allowing them to work and dwell rather than manage remotely.
These considerations are just the tip of the iceberg, and as many single family BTR sites are set for mobilisation throughout 2022 and beyond, I expect there to be disparity in how developers are tackling these issues practically on the ground through their design approach and operations strategy.
One thing is certain; a cut-and-paste approach to the design and delivery of resident experience across a combined multi family and single family BTR portfolio will not work, and as ever with resident experience, the key is in the detail.
*Katherine Rose is managing director of VervLife, a specialist, dedicated BTR operating and consultancy partner that launched in July this year. She was previously the director of BTR & PRS at Navana Property Group and PRSim.