The PRS Paradox

New Buildings Require New 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 tenants are willing to pay for the right level of quality, amenities, and additional services that come with premium BtR products.

Feedback from various London owners and operators reveals a main challenge: ensuring units are quickly occupied by quality tenants while maintaining the expected revenue per unit. This is particularly difficult when units typically command 20-80% above the historical local rental value. Building a brand and a community around a development is also becoming a necessity to stand out from competitors.

Traditionally, there have been 3 ways to occupy a development. However, more and more operators are adopting a new, proven 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 tenants 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

1. In-house approach

Building an expert marketing team and managing the full rental processes in-house gives full control over the customer journey, but it is proven to be a high risk strategy. Creating a recognisable brand can be incredibly expensive, and success is not always sustainable.

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 tenant acquisition cost.

2. Local agencies

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 tenants to be funneled 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.

3. Large national or regional agencies

While National or Regional agencies promise access to thousands of tenants, individual branches are disincentivised to prioritise BtR developments. This often leaves BtR owners paying high fees for a pool of low quality tenants. Local branch managers’ preference will always be to place high quality tenants 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 Fast-rising Fourth Solution

Home Made is London’s largest hybrid agency, 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 service in 3 distinct ways:

1. Increased demand

2. Competitively priced full-service

3. Fully tailored customer journey

1. Increased demand

Our market analysis indicates that tenant mobility is fast changing. 52% of tenants 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 tenants with BtR developments, regardless of the local market. With insight into what matters most to each tenant, 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 tenants 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 tenant 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.

2. Competitively priced full-service

Home Made is not a letting agent. 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.

3. 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 past BtR partnerships,  in 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

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.

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Home Made

Property tech rental agent