Build to rent is finding increasing popularity amongst consumers, investors, and developers. Rick de Blaby, CEO of Get Living, explains what’s driving the build to rent market and the challenges it faces in delivering a solution to the UK housing crisis.
The shortage of housing in the UK is well-documented. Finite land availability, concentrations of economic centres, a challenging planning environment, more demanding regulation especially around Net Zero Carbon and continued high demand mean that the problem is only likely to intensify.
Successive governments have formulated various approaches to support the delivery of more housing, of all tenure types. Homes England in particular has been an important catalyst providing financing opportunities to support the development and delivery of homes to both sell and rent. Meanwhile planning policy has evolved in recent years to recognise the importance of a multi-tenure approach.
Despite this overarching support, Rick de Blaby, CEO of Get Living, explains that there remains an inherent tension in terms of delivery. “Government policy is trying to liberate the system and the players, to be able to deliver more housing. But new homes aren’t being built at anything like the rate they need to and housing targets are often missed because the planning system is far too slow and complex.” That, he explains, makes the barriers for entry incredibly high – in both cost terms and in the time and skills required to navigate the process.
The other challenge, he points out, is the slow pace with which policy moves and the tension that creates between developers looking to innovate to meet future trends, the current situation, and policy that invariably takes at least two to three years to formulate. “Policy around Build to Rent for example is very nascent. By the time new policy has navigated the many steps to adoption, demand dynamics and lifestyles have, maybe, moved on a little bit,” he explains. “Therefore, it can be six or seven years between the policy creation and what you're trying to deliver, and sometimes that can create issues.”
There is then the challenge of the actual construction delivery, a challenge amplified in the post Brexit, post Covid, net zero carbon environment we are now entering. The construction sector is ripe for disruption as modern methods of construction become more sophisticated and available.
Developing communities
Regardless of these challenges, investment into the sector is soaring and Build to Rent is among the fastest growing segments of the UK housing sector. Demand for rental properties remains high and Get Living’s developments in London and Manchester have high occupancy rates. Offering safe, high-quality housing, the properties are furnished, Wi-Fi is included within the rent, and residents are free to decorate and have pets. With no service charge and no security deposit, the proposition is compelling.
“People choose to rent for different reasons,” says Rick. “Some people can’t afford to buy of course, but we’re also see huge demand from people who choose to rent for a wide variety of reasons –they like the flexibility, they want to be geographically mobile, they want to be able to live in a more appealing neighbourhood, or they want to be closer to amenities and they benefit from the on-site support. But the Get Living resident proposition has to be more than just a quality home, in a vibrant realm and neighbourhood, supported by exemplary service. There has to be a ‘why’ as well as a ‘what and a ‘how’; a sense that we provide a platform that empowers people to live the life they choose for themselves, to live their best life.”
The neighbourhoods provide a community feel using shared spaces and amenities, from gyms to gardens, social spaces and co-working spaces, which Rick points out, “sets the stage for the community itself to develop.”
Get Living has also embraced the digital-first trend, which Rick says is delivering a number of benefits for residents, the business itself and for its stakeholders. “Digital first is a mantra throughout Get Living and it’s a strategy that serves a number of really critical agendas,” he explains. “It provides greater control and operational efficiency, which supports stronger financial governance, and it provides us with rich data analytics, which enables us to spot trends to make more informed decisions and better manage reporting. The use of the App means that residents can manage payments, change occupancy and report maintenance issues 24/7, providing them with a better experience. We even have a Get Living bot on the Google Home platform loaded with around a thousand answers to questions”
Investing in global patterns
The company’s commitment to digital first is ongoing, ensuring that the technology evolves to meet the needs of residents, employees, and investors. “We're not done yet,” remarks Rick. “That whole world moves almost by the week and we're constantly updating what we've got, to try and keep it relevant and efficient.”
It’s not the only mega-trend that Rick and the Get Living team are constantly monitoring. Given the increasing focus on sustainability and the long-term nature of Get Living’s investment, not to mention the growing focus of institutional investors on ESG, ensuring the developments have sustainability at their heart, is crucial.
“We're now in a world of net zero carbon,” says Rick. “So, I think a lot of people in delivery of housing, especially in our build to rent sector, are probably ahead of policy on that. As long-term owners, we want buildings that are going to sustain in value and still be relevant in the long-term hold period that we're investing in. Unlike house builders who are motivated by the sale in two or three-years’ time, we have to live with the consequences of what we build.”
It’s proving to be a tempting proposition, not just for the occupants of the developments themselves, but for investors keen to combine growth potential with the different elements of Environmental, Social and Governance strategy. Get Living’s inherent support for social need, digitally driven strong governance, and attention to environmental standards as part of the net zero agenda are attractive, but the fundamentals are also there, as Rick points out.
“Our investor proposition says that we can deliver strong, inflation-hedged, outperforming revenue growth with high occupancy and slick operational efficiency, and it’s all founded on the core proposition that, as I said, we give people not just a great home and a great realm, but the opportunity to be empowered to live the life they choose for themselves.”
Adam Mahmood
Partner – Cities, Infra & Sustainability
adam.mahmood@draxexecutive.com
