Build it and they will rent

COMMENT Single-family rental is picking up steam in the market. This model is like build-to rent, the main difference lying in the mode in which it is deployed. Whereas BTR is typically a series of flats within a single building, SFR is often suburban with a number of semi-detached or detached houses as part of a bigger masterplan. Although this residential model is picking up interest, the main challenge appears to be a struggle to find supply, especially with investors and developers that are dependent on house builders to bring these types of developments forward. Questions of scale One reason for this might be that although SFR offers more of a mix and a stronger sense of community, in terms of amenity space it has not quite found its feet yet. To add to that, its scale just is not the same. We are seeing much smaller SFR developments coming out (say 50-100 homes) versus much bigger BTR developments (upwards of 300). Most SFRs in the market are small portions of larger, traditionally sold housing masterplans, meaning there’s been little to no opportunity to design the homes specifically to suit the rental market. There is also a huge difference in terms of objectives when it comes to SFR – for investors versus developers, housebuilders versus operators, landlords versus residents – especially when we consider what is desired in these developments. To push this sector forward, a good question for the designers or developers to consider is: “Who is set to gain the biggest advantage from renter-ready products?” This will identify the party that will push to make improvements in the sector. Is it the housebuilders, the greenfield developers or the investor/operators? Benefit the resident Everyone will have a different idea of what is important or what is required for ROI. For example, investors might focus more on the ESG as that is a key focus in funding decisions now, whereas housebuilders will typically be looking to reduce complexity, options, or variants in order to manage build cost. The housebuilders and developers could see this as an opportunity for futureproofing and risk-adjusting schemes, therefore getting the best ROI. Ultimately, if we want SFR to work, the focus must be on how to benefit the resident. If the development is making residents’ lives better, then all parties should see a positive outcome. Designing and delivering developments which really suit the lives of the people who live and work in them must be the main goal. We are always thinking about how our design work can have a long-lasting impact and benefit to the people who engage with it. It is one reason we are so invested in working in BTR – the alignment of long-term outcomes. So while SFR continues to grow, what do we need to factor in to measure its success? When it comes to the design, is the opportunity to differentiate lying not in what is built-in, but in the add-ons? For example, could you build a basic house but add extra amenity through what comes with the house? Like an office pod in the garden or no dining area but instead a pavilion/conservatory space that is an addition? New answers We need to be cautious of generalising SFR design – we did that with BTR – and we should think of everybody. We also need to consider the impact of Covid and people moving further out – all kinds of people now work from home. What elements of their homes are key to them? And if we incorporate something that can get them to stay longer, does that create a better ROI for the investor? To truly be a successful product, SFR will also rely on the diversity of age and backgrounds. This means the creation of communities where instead of just 50 detached houses, these developments should be made up of a mixture: one apartment block, next to artists’ studios, next to houses, with a central hub, and so on. This will bring the most value to all involved – bringing life and visitors to these developments, not just residents. This approach is the same as to BTR in that sense – what gets the people in? But the actual outcome won’t have the same answer. There will need to be different elements designed in to deliver the same thing and this will be the key takeaway for us as we continue to see this product evolve. Simon Saint is principal of Woods Bagot and Katherine Rose is managing director of Vervlife Photo © James Feaver/Unsplash