First the good news. At a build to rent (BTR) conference a couple of weeks ago I was encouraged to hear that London is more than holding its own in the developing build to rent sector. Yes, Manchester, Birmingham and Leeds may be making headway and getting a lot of positive press, but over half of the 70,000 BTR units in the pipeline are in London.
That’s good news because it’s a vote of confidence in continuing rental demand for London residential property. Indeed, conversations with many large scale investors suggested they expected the BTR sector to grow further as demand from residential developers tails off and reduces the competition for prime sites.
But there’s the bad news for private landlords, because BTR almost certainly means increased competition from people who are very serious about what they do.
The numbers alone should give pause for thought. According to the British Property Federation, there are 38,000 BTR units in London, with 10,000 already complete, 6000 under construction and 24,000 in the planning pipeline. Investors, from pension funds to the large BTR developers, apparently see the London rental market as a huge, secure and lucrative opportunity, and are ready to deploy billions to secure a foothold.
But we’re not just talking about increased volume of competition. Even a casual look at what’s being built suggests intensified competition around quality and features.
These BTR developments show new and deep thinking, not just about current demand, but future expectations, expectations which current private developments have generally not considered and which they would struggle to satisfy, even with retrofitting.
We’re seeing communal areas, designed around how people really like to live, ensuring they get fully used.
We’re seeing design for lifestyle, not just from the apartment but from the whole development, with pet friendly floors, bike and running clubs and most importantly, ultra high speed Internet!
We’re talking about ultra high speeds for new tenants from day one, with service standards on these fully networked developments beyond anything enjoyed by mere mortals right now in the UK. Since high speed Internet is seen as vitally important by 80 per cent of tenants, this is a huge selling point.
Throw in stylish kitchens and bathrooms, designer furnishing and on-site maintenance (with staff often attending to issues within the hour, let alone the day) and you have a compelling proposition. This new breed of landlord sees the tenant as a customer, who needs to be pleased, and they are actively looking for service-focused staff many of whom have come from the hospitality sector.
It remains to be seen how more traditional private landlords will seek to stay competitive. It’s true that if demand remains high enough to absorb the influx of new wholly rented developments then little might change in the short term. However, if the rise in demand is more moderate and prospective tenants find themselves with a choice between a shiny stylish, well-connected building, and something less so, the outcome is predictable. Private landlords themselves face a choice between upping their game or accepting a big enough discount to offset the pain of that slow broadband!
By Jaimie Beers
Jaimie Beers is Managing Director of Madley Property.