A new kind of BTR product is needed to unlock value from university towns
More and more people are choosing to rent. That opens up opportunities for build-to-rent providers to cater to more diverse groups. In particular, we need to look at how we are supporting young people who make an active decision to rent.
For many it can be part of a lifestyle choice, allowing people time to find their feet before they feel ready or can afford to buy. We know too well the challenges young people often face in the private rental sector – navigating run-down properties and fast-rising rents.
This generation of renters wants better, more flexible housing options, and BTR investors are rapidly waking up to the potential of this expanding customer base. However, there is scope especially for further investment in university towns and cities to better meet their needs.
More and more people are choosing to rent. That opens up opportunities for build-to-rent providers to cater to more diverse groups. In particular, we need to look at how we are supporting young people who make an active decision to rent.
For many it can be part of a lifestyle choice, allowing people time to find their feet before they feel ready or can afford to buy. We know too well the challenges young people often face in the private rental sector – navigating run-down properties and fast-rising rents.
This generation of renters wants better, more flexible housing options, and BTR investors are rapidly waking up to the potential of this expanding customer base. However, there is scope especially for further investment in university towns and cities to better meet their needs.
‘Ripe for rental’
To understand these first-time renters, it’s worth tracking back four years when around half of them went to university.
Despite varying lockdown restrictions and university teaching taking place online, students are still taking up their accommodation this year. This confirms that going away to university is about so much more than education alone. It’s a first step towards independence and establishing a life outside the family home.
Many people form deep connections to the towns and cities where they spend these formative years and want to stay put after graduation. Happily, this year’s accelerated move towards flexible working is making this an increasingly viable option – allowing people to remain close to university friends and commute to another town or city a few days a week. Securing a career in your chosen industry no longer has to mean upping sticks to the capital.
Developers should step in to meet this rising demand from graduates. In some places, this is already happening. In Sheffield, for example, there is now a good stock of BTR housing for students who want to make the city their home longer term. But there are others, such as Coventry, Exeter and Southampton that have excellent retention rates post-university and are ripe for a new kind of rental accommodation.
So the consumer interest is there, but what’s needed to win over these budding young professionals? Ultimately, success will depend on shifting perceptions and adapting BTR products and services effectively.
Post-grad product
The first and most obvious thing we must let go of is the out-of-date reluctance to rent to students and graduates. Leasing structures must be tailored to those without a long track record of employment or large deposits. If embraced properly, it offers a real chance for BTR to set itself apart from private landlords. We should consider what this cohort needs from the places they live and the companies they engage with.
Sustainability matters and these renters will interrogate the ethical credentials of a business more than any other generation. Developers must embed a sustainable approach throughout their places – from building materials to energy management and how you facilitate recycling. Here, BTR has a significant edge over private mum-and-dad landlords, as most investors will have their own corporate commitments and responsibilities to adhere to.
When it comes to design, the changes of the past year mean layouts should accommodate more residents working from home, perhaps side-by-side with partners or flatmates. Many renters won’t be ready to shake off all aspects of student life and developers should incorporate more three-bedroom flats that will appeal to those who still want to live with friends.
There’s also a strong argument for greater emphasis on wellbeing and mental health in this product, sustaining some of the services and support students will have had access to during their studies. How can technology help us connect these younger residents with one another and foster communities where they feel supported? BTR teams should make the process less daunting for newcomers to the housing market – cutting jargon and offering additional financial and legal counsel.
Student housing providers understand multi-residential living and know what makes this generation tick. By working closely with them we can develop a cohesive experience that takes young people from their teenage years through to being settled long-term renters.
There will always be a place in the market for high-end, bells-and-whistles BTR, but in these university towns and cities, there’s an opportunity to create something fresh – quality, consciously simple places with a clear and genuine purpose to serve the needs of a younger community.
Katherine Rose is managing director of VervLife
