I often ask the audience when I speak at property events, what they know about BTR. And I always get the same response – hardly any landlords know what it is. Most self-managed landlords I come across either aren’t aware of BTR, or think it doesn’t affect them. Yet it’s really important that landlords understand their market and the potential competition, even if they don’t have any BTR developments in their towns (yet).
Institutional investors and developers looking to take advantage of the growth opportunities created by Britain’s chronic housing shortage, coupled with the increased demand for renting, ploughed £4.1 billion into BTR last year.
Data collected by British Property Federation, the investment property owners’ association, shows that BTR developments accounted for around four per cent of all new homes completed last year, and in London that figure rose to 20 per cent at by the end of the year.
But this investment in BTR is no longer confined to London or major cities like Manchester, Leeds, Birmingham and Bristol, but is expanding into smaller towns across the UK too. Financial institutions such as the Lloyds Banking Group and Legal & General insurance, as well as retailer, the John Lewis Partnership, are also getting in on the act and diversifying into BTR.
The BTL model, which started with the big BTR operators – the likes of Greystar, Fizzy Living, Quintain (previously Tipi) and Galliard – focused predominantly on the student market to begin with. Now, most BTR developments are purpose-built blocks of flats, typically aimed at young professionals. But the sector is increasingly catering for older people and families too, as more and more people turn to renting or switch from the PRS to set up home in a BTL development.
Although small self-managed landlords still dominate the rental property market as a whole, the growth of BTR is gaining momentum and will increasingly pose a threat to smaller scale buy to let investors, especially in certain locations. So, it’s important to know what you’re up against.
UK BTR operators claim to have the advantage over private landlords, by offering individual high end professionally managed units with on site community facilities such as co-working spaces, gyms, cinema rooms, concierge and pet walking services, to name just a few.
And it is true that some renters will be set on switching to this way of life – it’s not hard to see how, with the impact of Covid, facilities such as ‘WeWork’ spaces and other onsite amenities will appeal to many.
But all these added extras do come at a premium cost, while the majority of small scale landlords offer good quality rental housing at affordable rents, with satisfied tenants. And that brings me to the key to a private landlord’s success, which is attracting a good tenant and making sure they stay as long as possible. To do this, you need to offer a quality ‘customer experience’ that results in customer satisfaction.
Tenants’ demands and expectations may be higher than ever, but seemingly small things can make a big difference - offer viewings at times that are convenient for tenants, make sure you can answer questions about day to day matters such as bin collection days and local amenities, and get off on the right foot by offering a welcome pack and a housewarming gift.
Be prepared to go the extra mile too. It’s important to make sure your property stands out from the competition, so think about the type of tenant you want to attract – whether that be families, young professionals or students – and keep them in mind when you decorate. Perhaps also consider including certain utilities in the rent and even allowing your tenant to have a pet. Always resolve issues quickly to avoid disputes and make a courtesy call after a month to check your tenants have settled in and allow opportunity for further questions, but other than that, try not to interfere.
You can read more about understanding your strengths as a private landlord in Hamilton Fraser’s article, What does Build To Rent mean for buy to let?
If you have a good tenant, they are worth their weight in gold, so offer an incentive to renew before the tenancy ends. Could you offer to keep the rent the same, or redecorate? Remember, the tenant is your customer so do all you can to keep them happy and you will be rewarded with shorter void periods.
The renting landscape in the UK has changed immensely over a short amount of time and Covid has added to that, as tenants’ demands and requests are clearly very different now than they were even two years ago, especially with the increase in home working.
Landlords today need to be aware not only of legislative change, but also of trends and developments in the rented sector. And BTR is something that all small-scale landlords should be keeping an eye on. BTR may not be quite the panacea people think it is, and given the housing shortage, private landlords are still needed. But the impact of BTR in some locations will be substantial - Savills has forecast that the number of BTR homes built each year could double again by 2026.
So, understand your offering, your competition and your customer. Make sure it comes down to you picking your tenant and not your tenant picking you.
* Paul Shamplina is founder of Landlord Action, Chief Commercial Officer at Hamilton Fraser, and is on Channel 5's "Nightmare Tenants, Slum Landlords” *
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