The UKAA recently held a roundtable discussion event that encouraged sector engagement with housebuilders and engagement activities.
Recognising the importance of single-family rental (SFR), the UKAA started a new dialogue between SFR investors, operators and housebuilders around the opportunities and challenges of building for the SFR sector.
The goal was to grow connections and engagement between those building homes for rent and those investing in and professionally managing them.
The first of several such events, the invitation-only roundtable event held in London in July was attended by 20+ senior leaders, including housebuilders and single-family rental investors and operators.
“We recognise the growth in single-family rental, driven by demand and investor support. To deliver such homes to be professionally managed in the long term requires high quality homes that meet the needs of the operator and investor. We will continue to work to bring investors and operators together with house builders to build stronger understanding and partnerships.”Brendan Geraghty, CEO, UKAA
One key foundational point raised was the importance of not identifying Build to Rent and SFR as mutually exclusive asset classes, as both are institutionally backed, professionally managed rental homes with community building, customer care, sustainability, and social value at their heart.
An interesting discussion took place which brought to light a present lack of mutual understanding between housebuilders and investors in Build to Rent.
The disconnect seemed to be between housebuilders’ head office commitment towards partnering with investors and the regional nature of such deals.
A single partnership contract nationally for investors was called for to help address this disconnect and provide a smoother route forward for all parties.
A need for certainty also played into this, which needs works both ways: investors need to have certainty of delivery programmes to a clear timetable, while housebuilders need to know that investors will commit to a deal and then stick to it.
These needs were not fully aligned with the housebuilder delivery model – something which requires further consideration.
Attendees held a discussion about risk and how to share it, considering how a risk model could be introduced.
The consensus was that there is a need to build a stronger understanding and long-term commitment to partnerships, with the goal of embedding SFR into future schemes and making it a long-term mature and sustainable market.
This would encompass a shift away from short-term opportunity and short-term thinking.
Such a shift, along with stronger partnerships going forward, would help to allay concerns around housebuilders’ priorities changing as market conditions move.
The key concern here was that, while there is a strong desire by housebuilders to engage with investors (when demand for private sales is down and Help to Buy has ended), there is a danger that once the private sale market picks up, builders will revert to that tenure.
Crucial to these stronger partnerships is education. This means investors appreciating the reality of housebuilder models, and housebuilders developing a better understanding of the design, specification and financial requirements of investors.
Local authorities are key stakeholders in meeting the UK’s housing needs and discussions included education and engagement. Local authorities can help unlock land for regeneration.
There is a role for both investors and housebuilders to play in maximising the potential of such opportunities.
The UKAA will take forward the work of this inaugural roundtable to further advance work around building for the SFR sector.
The first step will be discussions with the Home Builders Federation (HBF) on creating an education programme for its members on the vocabulary and business needs of Build to Rent.
The HBF also offered to support this area of work by bringing more housebuilders to speak to investor groups to enhance engagement and understanding on both sides.
This will focus on builders who already have partnership divisions that are set up for working with housing associations and local authorities, to leverage existing structures and knowledge.
Further roundtables will be held to build on this work. Sessions will look at key issues including partnership working, risk sharing, specification for long-term rental management, financial modelling and working with location authorities.