According to data published by the British Property Federation (BPF), there were 179,835 Build to Rent (BTR) homes complete, under construction or in planning across the UK in Q4 2020. This shows a 19 per cent annual increase against the same period last year.
As the BTR market matures and becomes increasingly competitive, the focus on asset preservation naturally sharpens; ensuring existing BTR developments retain long-term consumer appeal and the assets continue to generate meaningful, and sustainable, returns for investors.
Why should asset preservation be a part of strategy?
BTR differs from the traditional private rented/buy to let sector. BTR developments provide a rental proposition that combines a large-scale purpose-built product featuring enhanced on-site resident services and amenity, all professionally managed under single ownership. These elements help deliver a frictionless experience and create an enhanced value-for-money proposition for the renter that often outweighs that found in the wider private rented sector market. With the many varying facets of BTR operation to consider, it is essential for property managers to be strategic by keeping abreast of the property’s condition, the macro and micro market trends and the competition to ensure the asset and its occupants are performing at their optimum.
A must, not an option
BTR assets generate best returns for investors through constant marginal gains, so it’s essential to ensure expenditure and return are optimised and continuously assessed. It’s important to regularly review and benchmark all aspects of the operating asset. The cost and quality of facilities management contracts, staff performance and service delivery are just some example aspects that impact on everyday performance and contribute to marginal gains (or losses). There is little room for complacency in a maturing competitive market – every aspect counts.
Property managers must take a proactive stance when it comes to asset preservation to ensure consistent returns. This can involve substantial works or light touch-ups, introduction of new gym equipment more in line with the tenants’ preference or the purchase of trendy sofa cushions for the communal area. Asset preservation and improvements should be viewed as an essential route to ensuring the scheme retains its competitive edge. Those who see it as optional, risk losing market share to better equipped and more agile providers.
BTR assets need to be evaluated on a regular basis, and this on-going reassessment should include proactive cyclical redecoration programmes, a 10-year major works plan, regular staff training and upskilling to keep abreast of consumer trends, as well as stringent budget management and thorough analysis of data on return on investment.
The importance of thorough analysis shouldn’t be underestimated. At first glance, it may seem reasonable to hold off £20,000 that could be spent on the chemical dosing of the heating system. However, when taking into account the permanent damage done to the radiators, pumps and boilers, and the likely cost impact over the next five-six years, it becomes clear that in fact, proactive measures help prevent asset value erosion and unplanned additional expenditure.
Creating a virtuous circle
Happy residents translate into lower vacancy rates, fewer complaints, more referrals (equating to lower marketing and administration outlay) and a better maintained asset. Overall, tenants have a positive experience, tend to stay for longer and look after the asset better, treating it like a home, not just a stepping stone to another residence.
By way of example Allsop Letting and Management (ALM) has recently undertaken a brand refresh at The Keel in Liverpool in line with an enhanced offering for residents including the introduction of a residents’ portal, installation of self-serve parcel lockers; introduction of superfast broadband across the site, lighting upgrade throughout and securing a ‘greenified’ utilities supply; both securing significant energy savings for residents and upping green credentials. The team are now working on facilitating the ‘freshening up’ of the main lobby area so customers can enjoy a ‘new look’ resident amenity space. Timed with an exciting resident engagement programme including Friday night Food Disco, ‘Do you know your flatmate?’ interactive game show, virtual yoga and gym classes, and a residents’ art gallery. The upgrades across the scheme have optimised the asset all while events and engagement have fostered relationships within the development and created positive neighbourly interaction, ultimately strengthening retention and enhancing a resident’s experience. Undertaken in a proactive manner, such measures are a great way of upholding high standards and reminding customers of the value you’re creating.
This creates a virtuous circle, and its spill over effects are also felt by the employees looking after the scheme, who have few complaints, many compliments and are encouraged to devote their efforts to enhancing the resident experience, which gives the BTR sector its edge and importantly, its much needed place delivering great places for people to rent long term.
In 2020, Allsop Letting and Management won RESI Property Manager of the Year and in 2019 was voted BTR Operator of the Year by HomeViews.