One of the fastest-growing parts of the private rented sector is Build to Rent, where large-scale, institutional investors pump money in to provide bespoke, purpose-built rental accommodation for tenants.
It’s a rapidly expanding and increasingly influential sector, already worth over £25 billion and set to be worth £70 billion by 2021 according to Knight Frank.
It was first introduced by the Coalition government in 2012, with a £1 billion fund to support the creation of various Build to Rent schemes. Major firms such as Legal & General, Greystar and Grainger have invested heavily in the movement, with new developments popping up across the country.
Build to Rent schemes are characterised by bespoke designs and the promise of a higher-quality living experience, with particular appeal to modern tenants in the form of concierge services, communal areas, on-site gyms, games rooms, high-speed broadband and on-site maintenance teams.
How many schemes are there?
Figures put together by the British Property Federation towards the end of last year found that there are nearly 100,000 Build to Rent units across the country either completed, under construction or waiting on planning permission.
There are more than 20,000 units which have already opened their doors to tenants, with the majority to be found in London.
However, schemes are on offer throughout the UK, including in Leeds, Southampton, Birmingham, Norwich and Bristol. Scotland has only one operational development (in Aberdeen), but activity in this sector is set to motor north of the border after a spate of recent approvals.
According to a report conducted by the British Property Federation, Savills and the London School of Economics, Build to Rent is expected to be responsible for a quarter of a million privately rented homes by 2030.
What does this mean for letting agents?
Many agents might see the rapid growth of Build to Rent as a direct threat to their business. After all, if developers are letting the properties themselves rather than selling them off to landlords or investors, you might think the need for letting agents to manage homes on a landlord’s behalf would significantly reduce.
However, agents are being encouraged to see the expansion of Build to Rent as an opportunity rather than a catastrophe. Some agents are already involved with the Build to Rent sector and there have been calls for this involvement to increase.
The opportunity for new partnerships, diversification and alternative revenue streams seem fairly obvious. As a letting agent, you could look to offer expert advice and assistance to institutional investors, manage part or all of a Build to Rent development, position yourself as a rental expert to give firms a sounding board, and build strong, mutually beneficial relationships with developers and management companies to include Build to Rent as part of your roster of services.
In much the same way as some letting agents now offer management of short-lets, whether Airbnb or otherwise, you should see Build to Rent as something different and novel rather than the competition.
Those agents who look to be early adopters, and jump on the Build to Rent bandwagon, could see the biggest rewards – especially if the figures regarding the future growth of the sector prove accurate.
What's more, there's a potential financial incentive at play, with the upcoming ban on letting agent fees to bear in mind. While the fees ban won't come in until spring 2019 at the earliest, agents are still being warned to prepare now and to find ways of replacing the revenue they are likely to lose.
Diversifying your business, seeking out other forms of revenue and forming new key partnerships could all help when it comes to offsetting the negative impact of the fees ban.
With the implementation possibly only a year away, the government has warned agents to look closely at their business models to ensure they can cope with the incoming ban charged to tenants. The opportunities – and potential extra revenue – provided by Build to Rent may be something that agents will want to give serious consideration.
A streamlined approach
If you want to offer alternative services, it will help massively if your existing processes are streamlined and working in total harmony. This will allow you to add new services to your business with the minimum of fuss.
To make this possible, you need property software in place that allows you to manage all aspects of your business, from anywhere in the world, at the click of a button. Gnomen's cloud-based property software allows you to do this, with our cutting-edge, all-in-one system letting you manage your staff, diary, customers, marketing and comms all in one place.
In this day and age, you also need a slick, highly user-friendly website to stand out from the crowd. We design beautiful websites that also work beautifully, with tailored log-in areas for tenants to keep them up to date with all the latest developments.
For more information about what we can do for you, please get in touch with us on 0208 123 9019 or book a free demo here.