A dinner and conference with the British Property Federation this week convinces me that the build to rent era may at last be upon us. There was definitely evidence of Spring in the air and a spring in the step of the familiar London based residential agents, developers and funds. Talk of a PRS revolution hinged largely on large scale fund led schemes, only a few of which are currently evidenced by site activity, but much more seems genuinely likely to proceed than a year ago.
Leading the field is Delancey's East Village on the site of the Olympic Park and already delivering its first homes as part of the legacy of the Games. Customer service is the priority here and all management activity is site based and includes such small innovations as 'buddies' who will help you move in, 24/7 service, parcel delivery, furniture packs, and three year tenancies. Customers are able to decorate and hang pictures too - a small but valuable freedom in the rented sector.
Other talk was of branding to appeal to the horribly entitled 'rentysomethings' all of whom have perfect teeth and enviable hipster lifestyles.
Existing mature European and US models of rental were also explored in detail, and generally every delegate looked very happy, as if they had just found a £50 note under their chair.
Of course all this will come at a cost and affordability did not feature high on the agenda. I am uncertain how many 20-35s who can afford the rents at East Village which start at £1600 per month for an unfurnished two bed and presumably excludes other costs. As all managing agents will know, 24/7 on site services are expensive to deliver and modern complex developments with extensive grounds and facilities require intensive management and a detailed capex plan. Cost control will be number one priority on these scale developments.
Institutionally backed large scale developments are one thing, but they really only add up to a few thousand, as yet largely unbuilt, units. This is not going to solve the housing shortage any time soon and the viability of such schemes outside the separate country we know as London remains to be proven.
It will be interesting to see how successful management is after a few years. This is not simple rental portfolio management - it requires a sophisticated asset approach that will drive returns for investors whilst ensuring that management costs remain transparent and sufficient reserves are put aside for non annual maintenance and replacements.
I can't think of any sector that is better qualified to oversee that element than managing agents from the leasehold sector. They have had to invest heavily in skills, systems and accreditation in recent years to meet increasing demands for transparency and accountability from their customers.
Sadly, another theme of the day was that management remains a weakness in the UK and that getting this right was the key to encouraging funds to invest. I have heard this argument trotted out for 15 years now as the main barrier to PRS investment on a large scale. Time to lift the stuck needle, most of us have moved on a long way.
Leading the field is Delancey's East Village on the site of the Olympic Park and already delivering its first homes as part of the legacy of the Games. Customer service is the priority here and all management activity is site based and includes such small innovations as 'buddies' who will help you move in, 24/7 service, parcel delivery, furniture packs, and three year tenancies. Customers are able to decorate and hang pictures too - a small but valuable freedom in the rented sector.
Other talk was of branding to appeal to the horribly entitled 'rentysomethings' all of whom have perfect teeth and enviable hipster lifestyles.
Existing mature European and US models of rental were also explored in detail, and generally every delegate looked very happy, as if they had just found a £50 note under their chair.
Of course all this will come at a cost and affordability did not feature high on the agenda. I am uncertain how many 20-35s who can afford the rents at East Village which start at £1600 per month for an unfurnished two bed and presumably excludes other costs. As all managing agents will know, 24/7 on site services are expensive to deliver and modern complex developments with extensive grounds and facilities require intensive management and a detailed capex plan. Cost control will be number one priority on these scale developments.
Institutionally backed large scale developments are one thing, but they really only add up to a few thousand, as yet largely unbuilt, units. This is not going to solve the housing shortage any time soon and the viability of such schemes outside the separate country we know as London remains to be proven.
It will be interesting to see how successful management is after a few years. This is not simple rental portfolio management - it requires a sophisticated asset approach that will drive returns for investors whilst ensuring that management costs remain transparent and sufficient reserves are put aside for non annual maintenance and replacements.
I can't think of any sector that is better qualified to oversee that element than managing agents from the leasehold sector. They have had to invest heavily in skills, systems and accreditation in recent years to meet increasing demands for transparency and accountability from their customers.
Sadly, another theme of the day was that management remains a weakness in the UK and that getting this right was the key to encouraging funds to invest. I have heard this argument trotted out for 15 years now as the main barrier to PRS investment on a large scale. Time to lift the stuck needle, most of us have moved on a long way.
As the PRS sector grows, will we see more larger Managing Agents establishing their own lettings divisions in order to provide a turnkey solution?
ReplyDeleteI think most have portfolio management teams already and it is a natural progression. However there is a distinction between portfolio asset management and lettings. Residential Managing agents are well qualified to look after physical assets, add value, reduce voids and arrears and drive returns whilst remaining fully compliant. Well managed buildings will attract the best rents and stay rented for longer periods. Letting agents are not generally qualified to manage complex new build blocks. Our industry needs to sell its skills more expertly, we are still talked about as if the 1980s never ended.
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