Flat living in the UK is changing, but UK renters need to see it to believe it

Richard Greening, Chair of Islington Council Pension Fund, one of the first UK pension funds to invest in residential property said: “This is an asset class that is going to prosper – it all comes down to strong fundamentals. The demand-supply imbalance is significant and residential property not only delivers quality long term stable yields, but it delivers something socially important too.”

Steve Sanham, development director of HUB Group, which recently agreed one of the first forward funded PRS deals in the UK with M&G said: “We’re using great design to drive a community ethos and regeneration in our Acton PRS scheme. You need to think about the customer - how they want to live and how to drive value for them. The apartment design is simple, the configuration is key, the durability of materials is important, but it’s the extras that you provide to customers that make a real difference.”

However, winning over local councils is still an important part of the process for the sector's development.

Peter Bolton King, Global Residential Director, RICS said: “More local authorities are becoming aware of PRS, but many more need to see it as part of the whole mix in delivering affordable housing, rather than letting affordable tenancies get in the way of renting at market rate discounts.”

Sanham said: “We are finding more local authorities willing to have a proper discussion around section 106 and affordable housing quotas and they are becoming more aware of PRS, evolving from long-lease affordable housing provision to market rent discounts that can be managed as part of the whole building. In this way it is so much easier to create a positive community and to manage the property in an efficient way.”

Currently buy-to-let landlords dominate the rental market in the UK. Matthew Britton, CFO, Get Living London said: “It’s going to take professional landlords, scale, hotel style operations and visible landlords to help warm renters up to PRS.”

Michela Hancock, Development Director, Grainger said: “Build to rent is not yet considered an asset class in the UK – it’s difficult to trade and there isn’t enough scale yet. Only once investors become more comfortable, will it happen.”

Britton added: “At East Village, we’ve seen that scale happens at about 1,000 units. You have to invest in good management systems, in finance and operations. Then the benefits come in terms of seeing how residents’ behaviour affects profitability. Once you are at scale its easier to add smaller numbers of units at a time.”

Hancock added: “In the USA, multi-family housing is a well-trodden path, yet investors and providers in the UK need to get their head around the services, yield management systems, design and customer intelligence to succeed.”

She said that: “Grainger research shows that renters care about price, location and security. But they also care about who their landlord is. It’s not just about creating the right product, it’s about quality operations. Management companies have to be involved from day one of the build programme to make sure that the building is designed to run smoothly. A happy resident is a returning customer. If we drive loyalty, we drive the brand. Once you build brand loyalty you know you’ll have consistency of service.”

However, all agreed that the PRS has an increasingly important part to play in addressing the UK’s housing crisis.