BTR News spoke with Paul Belfield, Director at Rund about its involvement in the sector, the role of Quantity Surveyors and Clerk of Works, implementing robust ESG frameworks, and if services differ between Built to Rent and single-family developments.
You’ve worked at Rund for ten of the 35 years the business has been operating. In this time, how has the importance of Build to Rent changed, and what are you doing as a business to better support Build to Rent developers?
It’s no secret that over the last decade, housing in Britain has undergone a dramatic transformation. The fruition of Build to Rent in the UK, going from virtually non-existent, to emerging stronger than ever. This has presented an opportunity for the government, local authorities and the industry to ensure the homes people need, continue to be delivered through expediting delivery of housing for the rental market. We understand how important this asset class of housing is, and with such a substantial pipeline of projects planned, our role in supporting the delivery of these projects so that they are successful, timely and budget friendly – is essential.
As a company, we’ve allocated time and resources to understand the sector and focus on where our expertise and skills can suit this particular asset class. For example, the nature of Build to Rent investment means that providers are incentivised to build and let as quickly as possible – meaning that once stock enters the market, tenancy is secured, and new residents move in. Build to Rent moves fast, and there’s a lot at stake for investors, so providing clients with budget and programme certainty through our cost consultancy and project monitoring service is especially important for Build to Rent.
When thinking about what’s happening now; the current market instability and the supply chain squeeze is having a dramatic impact in the incremental cost of debt for clients. The knock-on effect is that it ultimately makes financing Build to Rent projects more expensive – and for investors, riskier. It will be interesting to see how this evolves in the coming months, and to see which models new construction uses for funding, in place of the debt-funded acquisition model.
Rund was recently involved in a project which involved the acquisition of an already stabilised Build to Rent development. What risks were involved in an acquisition like this, and what should investors/developers be looking out for? How does Rund fit into the bigger picture of a deal like this?
Most Build to Rent projects are acquired with the purpose of being managed and operated for long periods, so the potential consequences of unnecessary risks being taken in the acquisition process are multiplied over the entire timespan. For example, physical flaws in the design of the scheme and failure to meet compliance requirements remain with the buyer throughout the entire ownership of the property and can result in hefty costs down the line.
A unique risk to consider with acquiring these kinds of Build to Rent schemes is the potential for assets to become ‘stranded’ by falling behind future energy efficiency certification or market expectations for environmental impact. These are changing all the time – a good example would be the new minimum EPC requirements coming into place in 2025 – and if these aren’t fully understood, it can be easy for Build to Rent operators to get caught out.
This is where Rund fits into the acquisition process for a Build to Rent scheme. We provide technical due diligence that detects potential risks early on, preventing future costs and losses. Although this process takes a bit of time, it should be essential to any significant acquisition.
Build to Rent developments are all about carefully considered and quality homes. How important is the Quantity Surveyor’s role in ensuring cost efficiency, but still delivering an outstanding and high-quality development?
We understand the importance to our clients of the link between quality and cost efficiency. Accordingly, our Quantity Surveyors deliver true value realisation within Build to Rent schemes by implementing a managed investigation and decision-making system. We analyse the requirements of a project, for the ultimate purpose of achieving its essential function and quality in the most cost-efficient way possible. In addition, we deliver tangible benefits to the business through value-based decisions regarding the project brief, design and construction.
Typically, all projects have the opportunity for improved value, and Rund’s value realisation process aims to identify these opportunities. The value of this is to substantiate the client’s brief against project objectives; value for money is then achieved by ensuring that design solutions evolve in accordance with the agreed objectives. We then use value engineering to ensure that the functions of the project are achieved at the minimum possible overall cost.
How important is the Clerk of Works’ role in the lifecycle of a Build to Rent development?
Right from the start of any project, the Clerk of Works ensures granular attention to detail, from drawing and specification reviews, through to construction, aftercare and post-occupancy. Clerk of Works are experts in achieving quality in construction including build, mechanical, electrical, and plumbing quality as well as fire stopping integrity on all types of residential developments. This oversight and monitoring are important when delivering a Build to Rent development from the ground up. All Build to Rent schemes are delivered with a significant focus on high-quality design and construction. Clerk of Works are on site every step of the development, right from the start all the way through to completion.
Build to Rent has now established itself as an extremely attractive UK investment class, demonstrating that the income offered is both highly secure and shows long-term appreciation. However, the environmental impact of Build to Rent schemes is rapidly moving up the agenda, with some investors now putting sustainability credentials front and centre of investment decisions. How do you support developers in implementing a robust ESG framework into developments?
Investors and consumers are increasingly (and rightfully) voicing concerns about ESG issues, with legislation, regulation and reporting requirements evolving quickly around the world. The same goes for the UK and the sector we operate presents many opportunities to support and address broader ESG concerns in relation to the built environment’s negative impact on the environment. ESG must be considered at every stage of a project lifecycle, whether it be deciding on the construction method, material selection, waste management or the community impact – feigning ignorance of these concerns risks the long-term viability of the project. That’s why at Rund, we work with our clients right from the outset to implement a strong ESG framework for Build to Rent projects.
ESG frameworks are now essential for residential developers, house builders, housing providers and commercial developers. We really hold importance to having an action plan in place with KPIs and clear reporting against ESG criteria.
Investment into Build to Rent has been rising year-on-year in secondary regional hubs. How do the services required for single-family Build to Rent and multifamily Build to Rent developments differ?
The latest research from Savills and the British Property Federation revealed the number of completed Build to Rent homes could grow fivefold to hit 380,000 in the next ten years, with the value of the sector growing to £170bn. Interestingly, £30bn has already been invested in the sector, delivering 76,800 completed homes. These stats are testament to the growth of Build to Rent in the coming years.
The principles and foundations of services we would offer between single-family Build to Rent and multifamily Build to Rent developments are overall, rather similar. All Build to Rent developments follow the same principle of high-quality homes, designed to be desirable in the long term. Whatever the scale or complexity of the scheme, we would apply the same methods, skills and services to futureproof the development, and ensure an unrivalled level of quality in the final product.