RESI Insights: Transparency is key to successful Build to Rent

Recognising the gap in the market for well-serviced, professionally managed rented housing, billions of pounds of investment is flowing in - largely from institutional investors.

No longer will renting have to be a choice between ageing buy-to-let properties owned by distant landlords. Instead people will be able to choose between homes with a range of on-site amenities and shared spaces, helping create a sense of genuine community many tenants currently lack.

New entrants are drawing inspiration from the US multi-family sector. While not all the lessons are transferable - for example land availability and affordable housing requirements differ greatly - there is still a great deal that can be learned.

The most critical element in my view is service. The maturity of North America’s multi-family market means everyone is now involved in an ‘amenity arms race’ - differentiating your brand through the level of service offered. As with the rise of budget airlines, challenger banks or any number of digital apps, choice can really benefit the consumer.

Just as in the digital world, great design lies at the heart of good service in housing. During my time at Bozzuto, a US multi-family brand, we would focus on what we termed the ‘walk of the customer’. We would ask how they enter the site, where they drive or walk in from and how they know where the front door is. It may sound overly simplistic, but you usually find many issues you would not have considered.

Grainger is taking the same approach, delivering everything from the customer’s point of view because if they are happy they have no reason to move out, saving us on costly voids.

Grainger is well positioned to move into Build to Rent following more than a century of experience as a residential landlord and property manager. These transferable skills give us a head start on firms starting from a clean slate. It is this experience that led Grainger to integrate its various functions to ensure that the property and asset management team is working alongside the development team when designing our Build to Rent homes.

This collaborative approach is needed for Build to Rent in the UK. In the US there is more of an open-book approach, with lots of market information not available in the UK. To some degree this comes with market growth, but if we want to achieve that we need to be transparent.

The sector also needs to cooperate with local government if it is to succeed. The US multi-family sector took decades to reach maturity, but one of its first actions was to educate the local authorities. In turn they started creating incentives for developers, such as housing zones and tax breaks to build in contaminated or brownfield land, which is what you’re starting to see in the UK at a national level, but not as much at a local one.

Clearly, the federal structure of the US sets it apart from the UK, but nevertheless working effectively in partnership will be key to delivering homes at scale and ensuring Build to Rent can truly forge communities across the UK.

Developers also need to show the benefits for councils of doing Build to Rent. Partnerships, such as ours with the Royal Borough of Kensington and Chelsea, in which they keep the land and we develop and manage the rental buildings, can provide a steady long-term income stream in a time of straitened budgets.

Build to Rent can revolutionise housing in the UK. But this will only happen if there is a genuine understanding of what it can bring. And for that to happen, the industry needs to act together.

Michela Hancock, Director - private rented sector, Grainger