25th May 2018
The Residential market in the UK has changed dramatically over the last few years. Since 2014, there has been over a 10% growth in the number of households renting in the UK. This is expected to rise to around 24% by 2021. As a result of this rapid development, there are multiple terms being referenced across various sources, which can seem pretty confusing if you’re new to the sector. We thought it would be useful to define some of these terms here to help understand the market.
What are the different sectors in the market?
Private Rented Sector (PRS)
The Private Rented Sector is more of an umbrella term to describe privately owned property that is offered to the market as a rented product. This can cover a wide range of accommodation, from single dwellings owned by individual landlords through to professionally managed portfolios. It is estimated that PRS now represents 20% of the UK’s housing tenure.
Build to Rent/ BTR/ B2R
Not to be confused with PRS, Build to Rent is now considered a separate market. Described by the ULI UK as “purpose-built units specifically designed for long term rental occupation”, these large scale developments are built with the resident in mind, and include features such as:
Essentially, Build to Rent promotes a community feel that places value on experiences as opposed to possessions, where the resident should feel like they are renting the whole building and not just their apartment.
Multi Family Housing
In the US, Build to Rent developments are referred to as ‘Multifamily Housing’, and there are calls to adopt this term in the UK as it better defines this type of accommodation. The Multi Family model is well established in the US compared to Build to Rent in the UK.
Multifamily Housing is extremely attractive to investors and developers as it provides a safe, steady cash flow, but the product has to be right. The uplift from a regular rental development to Multifamily Housing, is reportedly 20% higher with its added amenities and services.
With both Build to Rent and Multi Family Housing, people are prepared to pay a premium to buy into a lifestyle of luxury, and have the hotel living experience in their apartment building.
Social Housing is accommodation provided by organisation such as local authorities and housing associations, with the aim of providing affordable accommodation.
The aim of a Housing Association is to provide low cost social housing for people in need of a home, and are run by private, non-profit organisations/ companies/ bodies of trustees.
Whilst many properties in the UK are conversions, a purpose built development helps differentiate apartments that were built to be apartments i.e. a large block of flats built from scratch.
Who is renting and why?
The growth in the BTR sector is in response to the housing crisis in the UK. On average, house prices are now almost seven times more than average income, making it very difficult to get on the housing ladder. Mortgages are also harder to attain, with deposit requirements increasing significantly over the last 10 years. It’s now estimated that the deposit to income ratio for first time buyers stands at 71% across the UK.
The Housing Crisis has hit particularly hard on the younger generation, who are often referred to as ‘Generation Rent’. This is a general term for the generation of young adults who live in rented accommodation and will find it more difficult to become homeowners.
Millennials and Young Professionals
It’s a popular opinion that the target demographic for Build-to-Rent are millennials/ young professionals. There are slight discrepancies as to what age range to class in this bracket, but generally speaking, millennials are the generational demographic born between the 1980s and the late 1990’s. Young professionals are simply millennials working in professional fields, usually aged in their mid 20s to mid 30s. Part of Generation Rent, the majority of Young Professionals will likely be living in rented accommodation to save for a deposit. However, it’s worth noting that there is also a cultural shift that has resulted in millennials renting. The millennial generation are considered to value more flexibility, tend to marry and start families later, change jobs more frequently, and prefer the lower level of responsibility associated with renting.
More recently however, the private rented market has gone beyond the traditional young professional stereotype, and now includes couples, families with children, pensioners, and international students, to name a few.
The Zeitgeist is a concept from German philosophy which literally translates as “spirit of the times”. There is an emerging culture of people placing more value on experiences than possessions, and renting by choice and not from necessity. Therefore, many BTR developments are tapping into the Zeitgeist by creating rental communities with luxury amenities and services, far more than just a place to eat and sleep.
What technology is being used in Build to Rent?
Smart Home and Home Automation
In order to make their developments a desirable place to live, many BTR developments are incorporating smart technology into their apartments. This means that residents can control their lighting, heating, appliances, door locks, security cameras and electronic devices remotely via their smartphone or computer. This provides residents with extra security, convenience and energy efficiency.
BMS (Building Management System)
A Building Management System (or BMS) is a computer based system that can control and monitor the electrical and mechanical equipment in a large scale development, including the heating, ventilation and air-conditioning (HVAC), security and access systems, lighting, power, fire alarms, and lifts, to name a few. This helps building managers monitor energy usage, and increases productivity by saving time and money. Some companies also refer to this as BEMS (Building Energy Management System), meaning an integrated, computerised system that monitors energy specific building services.
Internet of Things (IoT)
The increasingly popularity of home automation is all part of the IoT, where smart home systems and devices can operate together and transfer data over a network.
Superfast V Ultrafast broadband
With Internet becoming such a vital part of day to day life, and the average number of devices owned by residents on the rise, it’s never been more important to have fast internet speeds to cope with the demand. With 69% of young professionals saying fast and reliable Wi-Fi is the most important factor in rental property, many BTR providers look to include broadband in rental costs which is available from the day the resident moves in. Ofcom defines Superfast broadband as speeds of 30Mbps or more. The definitions of ultrafast tends to vary between sources and different Internet Service Providers, but as a guide, ultrafast can be defined as speeds from 100Mbps-500Mbps.
Fibre to the Cabinet (FTTC)
Much of the existing fibre in the UK is currently connected via FTTC (sometimes referred to as FTTK: fibre to the kerb). This involves running a fibre optic cable from the telephone exchange or distribution point to a roadside cabinet, with a copper cable linking the cabinet to your home/ office.
Fibre to the Home/ Premises (FTTH or FTTP)
Often referred to as a full fibre solution, FTTP technology is widely regarded as the best way to deliver fast and more reliable internet services. This provides an end-to-end fibre optic solution straight into the building i.e. not involving copper. This allows buildings to deliver faster speeds on a more efficient and stable connection, but is currently only available to around 2% of premises in the UK.
Smart Fibre Infrastructure™ (SFI™)
LivingCom’s SFI™ is a full fibre solution that provides a faster and simple way to cable a building, specifically designed for the BTR sector. With SFI™, buildings are effectively future-proofed for the next 25 years, as there are no restrictions on what can be delivered via fibre. SFI™ also enables the provision of many smart technology services such as Wi-Fi controlled lighting and heating, door entry, CCTV, digital signage, smart metering, and SkyQ. SFI™ helps add rental value, whilst reducing operational costs, and is designed with developers, landlords, and their residents in mind.
Managed Internet Service
With LivingCom, you can also benefit from a fully Managed Service. What this means is exactly what it says on the tin: everything is managed from the cabling, to launch, to ongoing 24/7/365 support. The network is monitored around the clock to ensure everything is running smoothly, and each customer has their own dedicated service manager as one single point of contact to provide everything you need.
Get in touch with a member of our team to find out how we can enhance your BTR development. Call us on 03333 800 800 or drop us an email at firstname.lastname@example.org, or find out more details on our website www.livingcom.co.uk/sfi
No time to chat? Get a Quick Quote for your Build-to-Rent development here.