We’ve seen a linear evolution of the residential market away from broken blocks with absent buy-to-let landlords to a professionally designed and managed customer-centric residential experience where you are living your best life with minimal impact on the environment.
Today’s consumer is looking for more out of where they live – from top tier service to amenities to a thriving community. We’re also seeing consumers choose a company who is committed to a better future and prioritises sustainability.
You talk about BTR 4.0 - can you explain more?
BTR 4.0 is where we stand today – the industry now goes beyond investing in ground-up projects designed with renting and life in mind, and we’re seeing a focus on Environmental, Social and Governance factors largely in response to COP26. And the shift in focus to ESG is major – there’s significant improvement in environmental design, energy use, PropTech, Whole Life (lifecycle) and accreditations to prove it such as LEED, Well, WiredScore and Active Score.
How can developers improve the community element of BTR for residents?
The best BTR developers plan with the resident top of mind from the onset. It’s also important to understand the shifting priorities of today’s consumer to cater best to the next generation of renters.
For instance, we’re seeing a shift in the desire of many Gen Z to future Gen A consumers to move away from an ownership model towards an ‘on-demand’ living experience, mirroring their Uber, Deliveroo, Netflix and technology-driven lifestyle. The elements that make up a BTR community should reflect these types of lifestyle preferences.
Perhaps the most important part of a community is to acknowledge that it’s a living and breathing thing, and developers should closely monitor what’s working and what’s not, and trends in the space to continue to innovative around design and offerings.
Will BTR help to standardise and professionalise the wider PRS?
There is absolutely an opportunity for BTR to standardise and professionalise the wider PRS.
Cortland Consult is a data-driven BTR consultancy owned by Cortland, and we’re always looking at industry data and thinking about what the opportunity looks like for BTR in the market. The data in the UK tells us that over 20% of the UK population rent from a private landlord yet less than 3% of that figure is in professionally managed BTR communities (such as those prevalent in the mature US multifamily market). This represents a huge opportunity to create a seismic shift in the customer-focused renter experience and the quality of the product.
BTR at its core is about creating a new gold star level of renting by offering residents an enhanced range of services from experienced onsite managers to concierge services. As an increasing number of today’s consumers explore and choose BTR, it will in turn create a new standard in the wider PRS – one that’s more customer-focussed and professional.
Have we seen a return to cities post-pandemic? Will this be to the detriment of suburban BTR?
The move to regionalisation started well before the pandemic, probably about three years before. Of course, Covid accelerated this trend following the government mandates to work from home.
And now it’s finally starting to feel like we’re coming out the other side of the pandemic, but we’re still waiting to see how things will shake out from a living perspective. Whilst the appetite for living outside central London is driving demand for high quality rental accommodation in locations within the South East of England with efficient transport infrastructure into London, we are equally seeing a new wave of renters entering central London.
This supports our view, and indeed the market trend, of a continued, strong appetite for BTR investment across the South East, both centrally and in strong commuter locations.
We have also seen a trend of people making the decision to commute further for the three days a week they are in the office to enjoy a more suburban lifestyle at other times. This means there is still a strong appetite and opportunity for suburban BTR.
How can BTR play a role in the government's much-talked-about and controversial levelling up agenda?
BTR isn’t the whole solution to the government’s leveling up focus, but it plays a significant part. In order to tackle the housing crisis, we simply need more houses, and we do that by diversifying the housing and private rental markets in order to grow.
What does the BTR sector not do well and could do better?
There is an opportunity for BTR companies to deliver a higher quality product and service through streamlining operations. Compared to other markets, BTR is still somewhat newer to the UK – and BTR companies need to continue to put forward the best possible offering to appeal to this market.
Cortland does this well as they’re a vertically integrated, multifamily real estate group. Cortland covers the apartment living experience from concept to completion, including investment management, design, build, and operations – while remaining entirely focused on delivering resident-centric, hospitality-driven service. This way they’re able to ensure that all the elements needed to create a thriving community underpin their gold standard.
How does BTR in the UK differ to other parts of Europe? Has it been embraced more or less here?
Every European market is incredibly unique when it comes to the adoption of BTR. Some are ripe for it (i.e. Spain) while for others the offering doesn’t quite make sense given consumer preferences and traditions (i.e. France).
In the UK, the opportunity is right for BTR. Coming out of the pandemic, Britons are craving a sense of community that BTR so vibrantly offers. Many UK consumers also struggled throughout the pandemic with private landlords who were massively delayed in fixing important issues.
This further spotlighted the importance and need for greater professionalism. While it’s still a newer concept, we’re continuing to see a rise in consumer interest in BTR. Additionally, institutional investment volumes into the sector continue to rise and annual spend was up 19% on 2020 – all signs that the industry will continue to grow and develop in this market.