With 10,000 BTR homes already in London and a further 9,500 under construction, it is no surprise that the rental market is decidedly focused on communal living. As such, property developers need to play the long game: no longer solely construction managers, but now also long-term landlords and lifestyle gurus. But how does the industry make the shift required to tap into the communal living trend?
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The demand for private rental accommodation continues to rise. An increase in house prices has seen ‘Generation Rent’, as they have been coined, forced into renting property, rather than saving for a mortgage. The trend of renting instead of buying is perhaps more prevalent in larger cities, such as London, Birmingham and Manchester, where prices for bricks and mortar fetch a premium.
By 2021, there will be nearly 5.79m households renting, which is a one in four ratio. The numbers go to show the demand for private rental accommodation – something that property developers will need to factor in when building new homes.
Once upon a time, developers would build new homes with the aim of selling them privately. Lately, however, there has been a shift in their approach. Build-To-Rent projects have become increasingly popular with property developers, as they construct, manage and maintain the buildings themselves.
Building a new property with the sole aim of renting it brings a new set of challenges. When developers construct apartment blocks and sell them off, their primary aim is to create good-quality living spaces that people want to buy. Once those properties are sold, the job of the developer is essentially complete.
With BTR developments, the dynamics differ slightly. Of course, high quality apartments are integral, but there are more aspects to the development that require consideration. The developers effectively become landlords, and as such need to keep an entire building of tenants happy on an ongoing basis.
These days, being a developer isn’t enough when it comes to BTR properties; they also need to be somewhat in tune with a lifestyle guru. Tapping into the mindset of modern-day renters and understanding their living needs is an integral part of creating a successful BTR community.
Average tenancies have doubled from 12 months to 2 years. The result means that renters have higher expectations when it comes to renting, as they are looking for a place to live for the long term and possibly even lay down roots.
The last 10 years have seen a seismic change, with technology bringing the world much closer together. A more connected world does more than just bring us closer with video calls and instant messages; it feeds into our mindsets and creates a different mentality.
You only need to look at the latest marketing campaigns from your favourite brands to see the word ‘community’ bandied about. It has become the latest buzzword, and now it has seeped into the world of property development.
People want their privacy, but they also desire to feel part of something bigger and more connected; they want to be part of a community. Savvy BTR developers have acknowledged this trend and are creating developments that meet the demands of modern-day renters with a community-led approach.
Amenities play a huge role in creating a living community within a residential development. They aren’t anything new. It’s common for new residential buildings to come packed with a range of features such as concierge services, on-site fitness centres and the odd Sainsbury’s or Tesco supermarket on the site. As our CEO Gav concluded in his recent analysis of such developments, convenience is key.
BTR developments have gone one step further, however, creating a sense of community in the process. The concierge service remains, but now it’s repackaged as a group of friendly folks ready to help, advise and answer any questions tenants may have.
Residential lounges have been added to provide a communal space where fellow residents can meet and relax. Think a plush, upmarket university common room and you’re not far off. Many BTR buildings also hold monthly events, including quiz nights and sports screenings. In other words, your local pub but more relaxed and just an elevator ride away from your home.
BTR developments with a focus on community are primarily found in larger cities. London and Manchester, in particular, are hotspots. In London alone there are over 10,000 BTR homes, with another 9,500 under construction and 27,500 projects having been granted planning permission.
Manchester is behind London in terms of numbers, but is still a growing market. There are currently over 5,500 properties under construction in the Salford area. While BTR developments won’t eradicate the private landlord, it is the new property boom in the rental market.
Once upon a time, developers were happy to build homes and promptly move on to the next project when they were sold. But with the increasing demand for rented accommodation, along with longer tenancies, developers are playing the long game.
With more financial benefits in favour of holding onto properties for the long term, developers can reap the rewards of sustained income, rather than secure an immediate profit that comes with a successful sale. Regular property development, where properties are built with the intent of selling, won’t disappear. Yet it’s clear to see that BTR projects are the new trend in town, and it looks like it’s here to stay.
Interested to find out more? Register here for our upcoming webinar where we’ll be talking more about the real value BTR developments bring to their community.
© Treex 2020