Traditionally in the property market, renting is regarded as a prerequisite to purchasing a property. Whilst this is typically still the case, there is a growing trend in people looking to rent for the long term as opposed to purchasing a property. This shift in mindset has developed significantly in recent years, expedited due to the coronavirus pandemic.
As the coronavirus pandemic has developed, flexibility has become a significant motivator in both working and home lives. The uncertainty that has shrouded society has led to people desiring a more flexible lifestyle for the long term. Whilst previous generations had prioritised homeownership, newer generations are looking more towards being easily adaptable in today’s economically flexible society.
As such, the build to rent sector is attracting record levels of attention and investment as this trend has developed. BTR represents private property that is built for the purpose of renting rather than to be bought. As more prospective buyers have been deterred from purchasing a property as a result of rising house prices, the desire to rent has grown.
According to data compiled by Ascend Properties, there are 36,054 BTR units currently under construction which will provide an estimated £10.9bn in value to the BTR market. In London where property values are higher, an additional estimated £8.1bn is projected from the units under construction. This has led to predictions of accelerated growth in the UK’s build to rent market over the next 5 years.
Ascend Properties has forecasted that 73,535 further build to rent completions will enter the market by early 2025. This is in addition to the existing 53,750 completions currently within the market which represents a 137% increase on current figures.
The marked increase in the number of BTR homes in the private rented sector on 2017 figures is crucial, accounting for 1% of all UK rental properties. Whilst the latter figure may not seem substantial, it is important to consider that the private rental sector itself has only grown by 0.3% since 2017. This emphasises the strength of the BTR market currently.
Ged McPartlin, Managing Director of Ascend Properties, states: “The build to rent sector is an increasingly important part of the market, and we see that trend continuing over the next five years.”
McPartlin continues, “there’s a growing recognition that owning property may not be the norm in the future, as is already the case in numerous other European countries. In the UK’s most expensive regions such as London, many already rent for far longer than we’ve seen traditionally and while we remain a nation of aspirational homeowners, not everyone is as focussed on realising this aspiration.”
“Therefore it’s important that residents are able to live in high-quality properties fit for their needs. Build to rent fits this gap perfectly, so it’s no surprise that the sector has seen an impressive level of growth in just a few short years, as well as a notable level of investment.”
According to Savills’ UK Build To Rent Market Update, “more than £1.2 billion was invested into UK Build to Rent during Q1 2021 which represented the highest first quarter on record.” This poses an interesting dynamic for the future of the private rental sector and where key investment and focus will lie.
If demand continues to surge within the BTR market, particularly amongst 25-40 year olds, this will further highlight the growing shift in the housing market.
Where technology comes in
An increasing number of build to rent developers are turning to property management software to boost their operations and transform the tenancy journey for all stakeholders.
By bringing in advanced automation and streamlining the financial, accounting and communication functions, businesses are able to prioritise the more lucrative and valuable tasks. In contrast, an efficient, scalable system would handle the menial functions that would’ve resulted in expensive time constraints.
For BTR developers, an efficient and streamlined system of reporting is required. As a development is run predominantly like a business, keeping all stakeholders up to date is essential. A software that provides in-depth, customisable reporting ensures that BTR providers can compare performances across multiple portfolios, improve the efficiency of their workflows and maintain full transparency with all stakeholders.
Resident engagement and providing stellar customer service is a particularly significant area of attention for BTR managers. Property management software allows BTR providers to focus on these key areas through one connected system with bespoke apps for every stakeholder. A fully connected platform promotes flexibility, swift communication and efficiency in handling complicated workflows across numerous lease types.
Planning ahead and ensuring a software is in place, before a development is completed, allows property managers to solve any problems before they arise, thus enhancing their customer service offering.