Redleaf Communications recently hosted a panel discussion at The Shard to discuss ‘Building Brands in the Private Rented Sector’.
Chaired by Samantha Partington of Property Week, the panel included John Kenny, COO of Grainger plc; Charlotte Steedman, Founder of Conductor; Lesley Roberts, Partner at Allsop; Matt Hutchinson, Communications Director of SpareRoom; Alastair Carmichael, Head of Real Estate Finance and PRS Lead at GVA; and Oliver Campbell, Development Director at Linkcity.
Renting was once often considered a temporary solution for students and young professionals. But people are now spending an average of 12 years in rented accommodation and the number of households living in private rented homes is anticipated to grow by 33% by 2025.
Although our economic system is stacked towards buying property, renting is an option that suits a lot of people, said Matt Hutchinson from SpareRoom, highlighting that people now expect to rent long term after they graduate, but expect more from renting.
Now, a change at government level means renting has begun to be seen as an important element of housing in the UK and has evolved into a lifestyle choice, said Alastair Carmichael from GVA.
But our panellists pointed out that, although attitudes towards renting have changed and developers are responding to this through a growing number of build-to-rent schemes, the private rented sector remains a relatively nascent area of the industry.
The concept of long-term renting is still fairly new and recognisable consumer-facing brands are yet to emerge. Meanwhile, a generally younger market is still working out what its expectations of the product.
Developers need to engage with their audience to explain their offer and how build-to-rent differs from the wider private rented sector, said Lesley Roberts of Allsop.
Charlotte Steedman of Conductor agreed, saying that, according to research undertaken amongst renters by Conductor, a very small proportion were aware that purpose-built rental properties existed. And while the property industry might consider WeWork a household name, for example, only 2% of renters polled had heard of it.
Matt Hutchinson underlined how vital it is that the build-to-rent sector differentiates between branding itself for the industry and branding itself to demonstrate its benefits to a consumer audience.
“We need to barista ourselves”, said Lesley Roberts. “You pay £2 over another cup of coffee for a good barista. Look at the value chain in that: we need to redefine our offering to the sector and to the consumer so that they recognise the value of what we’re doing for them.”
A strong brand evolves from in-depth understanding of its audience and by understanding how the customer wants to live. ‘Brand’ is a holistic term and needs to be built up before it has equity - it is much more than a flashy logo!
Our panel agreed that although developing brands in an emerging subsector is a challenge, it is also an enormous opportunity. Potential renters will be attracted to schemes by developers with a great brand, a strong track record and about which people are talking, said Linkcity’s Oliver Campbell.
John Kenny highlighted that families make up over a third of demand for homes in the private rented sector more broadly. But Charlotte Steedman suggested that it is Millennials who really understand renting: “Millennials place value on experience; they don’t place value on things … They rent Ubers, they rent ZipCars, and they do everything on demand,” she said.
So, said Oliver Campbell, successful brands in the private rented sector need to appeal to a highly brand-aware, tech-savvy audience and that, in the age of social media, brands have to be instantly recognisable.
Alastair Carmichael pointed out that the design of the product needs to reflect its market, with more space devoted to communal amenities that bring tenants together and therefore make them want to stay in a development longer.
John Kenny agreed: “In designing build to rent, you’re designing a community,” he said, emphasising the need to think about the way people live and the importance of offering convenience, lifestyle and great service.
Tight economics when bidding for land means that innovations such as and off-site construction and level 6 BIM will speed up building and improve ongoing maintenance of build-to-rent schemes, according to Oliver Campbell.
Alastair Carmichael anticipated further segmentation of the market, with coliving, suburban PRS and elderly care all likely to emerge.
But all our panellists agreed that PRS has a bright future. As, Matt Hutchinson said, brand value has arrived in the coworking space because it allows businesses move to different spaces as requirements change.
This is also the case in the PRS sector, which has the capacity to cater to peoples’ needs at every stage of life: “Say you graduate and want to share a flat with four people, then you meet somebody and want to live with your partner, then you’ve got children: if one company can deal with all this and potentially move you between buildings and units within the building and you have this continuous experience, there’s a huge value in that.” But, he added, “the market has a way to go to get there.”