By Mary-Anne Bowring, Group Managing Director of Ringley and Creator of Busy Living
Although portals like Rightmove and Zoopla have brought househunting into the digital age, the way we deliver and manage housing often still feels like it’s stuck in the analogue era. House-building techniques have barely changed since Victorian times, while property management is still overly reliant on physical paperwork. However, one sector looks set to change all that – Build to Rent.
Apartments purpose-built for rent are hardly a new invention. In fact, at the turn of the 20th century the majority of Brits rented, often from institutional investors such as pension funds and insurers who are now backing many Build to Rent schemes across the country.
In the US and some European countries like Germany, multifamily housing – as Build to Rent is also referred to – is well established as an asset class. Yet only now in the UK is it taking off again – but it has already had a major impact.
According to the latest research by the British Property Federation and Savills, there are nearly 167,853 Build to Rent homes either complete, under construction or in planning across the UK – a 22% jump against the same period last year.
Modern Methods of Construction (MMC)
Many Build to Rent investors have been early adopters of Modern Methods of Construction (MMC), such as offsite manufacturing, which offers quicker build times and improved building performance – such as through improved air tightness.
For example, pensions and insurance giant Legal and General has set up its own modular housing factory, while US multifamily giant Greystar has funded the delivery of the world’s tallest modular residential towers in Croydon.
Modular construction had previously been avoided by house-builders due to the high upfront costs. The banks have struggled to work out exactly what their security is during a modular build, which requires most of the build money up front – whereas the banking model is based on staged based loan advances dependent on valuation of how much of a building is constructed. Of course with module, most of the value for some time sits in the modular factory owners’ premises which is not an asset to the bank.
However, for investors wanting to maximise the net operating income of an asset – essentially the rent minus the costs of running a building – MMC is attractive as reduced time on-site means rent can be collected sooner, while better build quality means less money wasted on energy and heating.
However, it’s not just in construction where Build to Rent is driving change. From leasing through to operations and management, many Build to Rent operators have adopted a digital-first approach to meet the needs and expectations of today’s tech-savvy customers.
For example, the UK’s largest listed residential landlord – Grainger plc – has been using its Connect platform to fully digitalise the lettings journey for prospective residents. The tech is now proving useful in keeping both residents and staff safe during the Covid-19 pandemic.
While Build to Rent has broad appeal, from students to downsizers, the typical target demographic for most Build to Rent schemes is young professionals looking for somewhere convenient, flexible and well located.
This customer pool especially is used to managing their lives through their phone, laptop or tablet, including their home, so it’s understandable why many Build to Rent landlords have been forward-thinking in their approach to tech.
Many Build to Rent operators have developed their own consumer-facing app for customers that allows them to do everything from request repairs to organise social events with friends or other residents.
Our own technology platform, Busy Living is sector-agnostic and can be used for any type of real estate asset where an investor needs to monetise space, market amenities, connect to the local area, and build a community through chat channels and neighbour to neighbour services.
It’s one of the first systems to combine a plug-and-play cashless payment platform with biometric security features used by the Ministry of Defence. Security features include facial recognition and fingerprint scanning, which allow operators to grant access and manage spaces without 24-hour staffing, saving on costs.
In addition, Busy Living can be plugged into our new automated lettings app, PlanetRent which automates chunks of the lettings process and streamlines the tenancy journey.
This empowers on-site staff such as concierges – who may come from a hospitality background rather than a property one – to draw up legally watertight tenancy agreements immediately after viewings, helping speed up the leasing process and boost occupancy rates without cutting rents.
As the housing market reopens, Build to Rent has real potential to spearhead the revolution within the UK’s housing market.