Why residents are at the heart of build-to-rent
It is no longer about landlords. Today’s property managers recognise that happy residents are at the heart of any successful build-to-rent scheme – but that requires smart technology.
While build-to-rent apartments currently make up just two per cent of the private rental sector in the UK, the model is being viewed as a new asset class and potentially a large source of new supply.
Yardi recently invited a panel of experts in Leeds – a ‘northern powerhouse’ city heavily invested in cutting edge build-to-rent development – to discuss the rapidly-evolving sector.
And the lessons being learnt can be applied to the Australian market.
According to Joanne Pollard, director of build-to-rent specialist Five Nine Living, the sector faces three main challenges: not enough stock, a steep learning curve and unknown costs.
Jonathan Pitt, the national director of property services group Countrywide, agrees. He says the big challenge is to determine where build-to-rent sits in the market.
“What is the premium people will pay to live in a well-run building with amenities?” he asks.
Andrew Wells, a partner and non-executive chairman with Allsop Letting & Management says the sector must move away from the view that property management is about bricks and mortar.
“It’s about the resident, the occupier, the customer,” he says.
The build-to-rent is a service industry, in a way that buy-to-let is not, the panel says.
“It is a big transition to think about the tenants as the customers,” adds Graham Bates, founder and chief executive of private rental service provider, LIV Group.
But services and amenities obviously come at a cost. How do you manage that?
“Amenity space has to have a purpose, a compelling reason for people to use it,” Pollard explains.
“You also need to build in flexibility. We are advising on the design of buildings now that won’t be occupied until 2019. Can the amenity space be used for pilates one day and a video conference the next?”
Pitt points to a current development in Wembley, which features a gym and a large terrace.
“People think, ‘I can afford to pay X pounds more, because I don’t have to pay for gym membership any more’.”
So, how are property managers using technology to manage buildings and relationships with tenants?
Bates says his company is looking at dynamic rent modelling – common in the United States, but not so much in the UK.
“It basically means the price of any one apartment could change daily. You can look at availability in a given development that week – where is the demand? Is there a waiting list for one-beds – should you dial up the rents on those? And if there are a lot of vacant two-beds, should you reduce the price? None of us really know how it will pan out.”
Liv Group is investing in smart app technology, Bates says.
“Residents use the app to report maintenance issues and book amenities – we are launching a building with M&G this summer where you can book a tennis court. And we can also send push notifications. If there’s a problem with a lift, we can tell people through the app, ‘there’s a problem, it’s being fixed, don’t come home having done a big shop’.”
At Countrywide development, Pitt says “you can book viewings online, share all your documentation online, plus report maintenance and other issues”.
“It’s all about trying to make life easier rather than replacing the people on the ground who look after the building.”
“We continue to work towards readying an ‘end to end’ residential platform and associated products for the Australian market,” says Terry Gowan, regional director of Yardi Australia.
“We envision that the build-to-rent market in Australia will be the focus of large institutional investors, including super funds, and that this will create a large demand for more sophisticated platforms.”
Yardi, with more than 30 offices and 5,000 employees worldwide, designs, develops and supports real estate investment management and property management software. For more information about Yardi, visit www.yardi.com/anz/