Build to Rent Lettings - The PRS Paradox
New Buildings Require New Build to Rent Lettings Solutions
London’s Build to Rent (BtR) sector has reached adolescence with 17,000 units completed since 2012, and a further 58,000 under construction, and with planning permission.
Fully occupied developments show that residents are willing to pay for the right level of quality, amenities, and additional services that come with premium BtR products.
As the market continues to develop, feedback from London owners and operators reveals one key challenge: ensuring units are quickly occupied by quality residents while maintaining the expected revenue per unit. This is particularly difficult when units are often commanding rents between 20-80% above local market rates. Building a brand and community around a development is also becoming a necessity to stand out from competitors.
Traditionally, there have been 3 ways to market a development. However, more and more operators are adopting a new, proven Build to Rent lettings strategy to become winners of the BtR sector.
Three Traditional Solutions
A building with 400 apartments will require approximately 15,000-30,000 unique household enquiries (based on traditional London statistics).
In order to reach the volume of prospective residents needed to fill a BtR development, owners and operators traditionally had just three options:
1. In-house approach
2. Local agencies
3. Large national or regional agencies e.g. Countrywide or Connells
Building an expert marketing team and managing the full rental processes in-house gives full control over the customer journey, but it has proven to be a high risk strategy. Finding the right on-site staff, creating the right incentives, delivering a 24/7 service and offering out of hours viewings is expensive to manage and not always successful.
Without brand recognition and brand loyalty, a scattergun approach is often adopted, requiring continuous investments into advertising on the tube or in newspapers. Traditionally, this has been the safest option for operators. However, many are forced to try alternatives when unable to achieve a desired ROI, or maintain a sustainable resident acquisition cost.
Typically, a BtR unit requires 30-50 unique applicants to find the right occupier. Local agents do not have the resources to create the volume of applicants needed to fill large developments. Because applicants need to be sourced from all over London, local agencies are not equipped to drive demand. This struggle is intensified in remote areas of London where the level of local demand is historically low.
When working with local agencies, it is also common for high quality residents to be funnelled towards private properties where agents can make higher commission compared with BtR operators. The result is slow uptake, lower yields, and a very inconsistent customer journey for applicants.
Large national or regional agencies
While National or Regional agencies promise access to thousands of prospective residents, individual branches are disincentivised to prioritise BtR development. This often leaves BtR owners paying high fees for a pool of low quality applicants. Local branch managers’ preference will always be to place high quality applicants in higher paying private properties.
This approach also places the entire customer journey in the hands of multiple branches. Despite engaging with one brand, applicants are therefore likely to receive a varying quality of service. As a result, this option removes all the benefits associated with building a brand and a community around a development, while maintaining the cost advantage and benefits of scale.
The New Fourth Solution
Home Made is London’s largest hybrid letting solution, covering more areas and more properties across Zones 1-6 than most of London’s traditional agencies combined.
Our advanced technology, and unique operating model enables us to transform the London BtR lease-up service in 3 distinct ways:
1. Increased demand
2. Competitively priced full-service
3. Fully tailored customer journey
Our market analysis indicates that resident mobility is fast changing. 52% of residents now relocate to a completely new part of the city when moving homes. This means that players who only market locally miss out the majority of the market.
We cross-sell every neighbourhood in London, allowing us to match high quality residents with BtR developments, regardless of the local market. With insight into what matters most to each resident, we can introduce them to new areas by highlighting benefits and similarities of developments based on cost, commute, and local culture.
We are also the only agency in London with a dedicated demand team. As a result, over 50% of the residents in our database were engaged outside of traditional property portals such as Rightmove and Zoopla (unlike traditional agencies who fully depend on these marketing channels).
Using real-time market analysis, an extensive resident database and sophisticated digital marketing tactics, we deliver the most cost effective methods of creating demand. Combined with our WhatsApp for Business enquiries, 24/7 call centre, and the ability to conduct viewings any day of the year, we are proven to fill developments in record time.
Competitively Priced Full-Service
Our efficient, data-led ways of working have allowed us to increase the yield of past BtR partners by up to 75%-100%. Our services are also priced at the most competitive level possible, helping BtR owners save 30-60% of their marketing spend. Our aim is to improve BtR owners’ net income, while delivering a superior customer journey and customer engagement.
As a BtR partner, we can manage the rental process end to end and offer fully collaborative ways of working.
Fully Tailored Customer Journey
Working with Home Made is similar to bringing in a sophisticated and experienced in-house team. As some operators prefer to build their own unique customer journey, we are uniquely positioned to offer a white label alternative and adapt to fit a pre-designed brand experience. From an applicant’s first phone call through to paperwork and move-in, we are able to manage the full customer experience under a BtR development’s bespoke brand guidelines.
Delivering the best possible customer experience creates lower voids by increasing renewals and extends the length of leases. We also cut operating costs over time by increasing customer referrals to like-minded prospects.
With BtR partnerships in Edgware, Brentford, Croydon, Archway and Finchley, we have been able to:
✓ Save operators hundreds of thousands in marketing spend
✓ Increase building occupancy rate by up to 15% compared with previously used traditional agencies
✓Maximise net operating income
✓ Generate superior customer advocacy levels
For this reason, past BtR partners have built long term relationships with us and introduced us to their whole portfolio.
If you would like to speak with one of our expert Account Managers about BtR and our hybrid model, simply tell us how to best reach you here.