Construction starts and completions in the Build to Rent market are down 80% in 2023 so far, according to the British Property Federation, due to build cost inflation and economic uncertainty. Despite this, investment in the single-family housing Build to Rent sector is up, with CBRE identifying c.40 investors for the next five years, and over £380m of development so far this year.
By Sigma Capital
There is a clear opportunity for Build to Rent to play a key role in housing supply, particularly as mortgage rates continue to rise exponentially, making the demand for new homes for sale weaker. Sigma’s market research earlier this year corroborated this, with 71% of renters doing so because they can’t afford to buy.
However, that’s not to say renters don’t know what they want from a home – they’re not choosing based solely on price. There’s a real focus on quality of both services and the property.
Evolving renter desires
Location is still a key factor for renters when looking for a property, with 89% ranking it as the most important reason for their decision. Tenants want a convenient location with plenty of amenities and access to recreational spaces, such as green space and parks. Plus, after a few years of lockdown, 69% of renters now rate access to a garden as important, as well as a space for a home office, as many take on hybrid working habits. When choosing sites for Build to Rent, developers must take these factors into consideration.
It doesn’t just start and end with physical factors, either. Renters’ expectations of maintenance are changing, too. 61% expect a response within one hour for emergency repairs, and they want to be able to carry out minor changes themselves to make their home their own, like hanging pictures without consent. This could involve filling out a property alteration request form, so that landlords have a clear indication of what work has been carried out, and what needs to be reverted to its original state at the end of tenancy.
Only a third of tenants expect to have to repair a property after decorating at the end of their tenancy, so it’s easy to see where end of tenancy disputes stem from, leaving residents with a negative view of former landlords. The onus is on Build to Rent landlords to set expectations of response times, and what can be changed cosmetically up front, to avoid any disputes.
Sigma Capital invests a lot of time to manage expectations up front and throughout tenancies, with a mobile app that lays out responsibilities for both landlord and tenant, offering pre-check out property health checks, to help identify any maintenance issues that need attention before moving out – working together with the customer so they get as much of their deposit back.
How landlords can deliver the new ideal
Ultimately, the way we live has changed since the pandemic. More renters now work from home, with 44% requiring a home office space and half of renters own a pet, according to Sigma’s research earlier this year.
“Many people have now set up businesses from home, whilst this isn’t something landlords typically allow, following the changing needs and demands, we have facilitated this within our Simple Life brand with residents filling out a home business request form. Meeting these changing expectations is the key to improving conditions for tenants. More landlords are now moving away from charging ‘pet rent’ and our own research showed there was no correlation between end of tenancy damage for tenants with and without pets.”Luke Lightfoot, Director of Asset Management, Sigma
It’s also important to acknowledge and manage the external landscape. With energy bills rising, renters expect to see sustainable features in their properties, without an added price tag. This includes superior double or triple glazed windows, high levels of insulation and energy efficient lighting, with over half of renters in our research highlighting these as energy-saving enhancements they anticipate landlords to provide.
It’s not just about the properties themselves, but also having a stable home. In a changing world, renters place value on stability and security. Whilst the recent proposed Government renter reform bill is now favouring the flexibility of monthly periodic tenancies for renters, there is a huge opportunity for Build to Rent landlords to highlight that they can already offer the best of both worlds for tenants, with the flexibility of a monthly periodic tenancy and the security of their property being purpose built for rent, with no fear of a small private landlord wanting to sell up. Sigma’s Simple Life Build to Rent brand has already started to align themselves in this way by offering monthly periodic contracts after tenant’s initial 12 term.
As private rents increase and Build to Rent in local areas start to increase market standards, renters will be looking for that proven better quality service, and the reputation of the landlord is likely to become more prominent in their decision-making process. Build to Rent can play a wider role in raising the expectations and standards across the entire rental industry, by offering security and addressing renter needs, to have happy, engaged, and loyal tenants.