“BTR, is that an app?”
In a recent Property Week article on Build to Rent (BTR), Grainger’s Chief Executive Helen Gordon discussed the need for education around the sector, stating that ‘BTR is still misunderstood by too many’. The need for education around BTR is vital for the sector’s continued growth and while the article focuses on the impact this lack of understanding has from a financial perspective, the lack of education within our target audience also poses a threat to the perceived value of the sector.
Since embarking on my property career the words ‘Build to Rent’ have become such a frequent feature in my every day conversations that it’s hard to believe the subject isn’t so commonplace to everyone. But when the work bubble pops and I head home to a group of mid 20, non-property friends, my mentions of BTR are met with a confused ‘BTR? Is that an app?’
When I first mentioned Build to Rent to my housemates I was shocked by the blank expressions I was met with, and it occurred to me that perhaps BTR wasn’t as widely talked about as someone in property might believe. As it turns out, an Instagram poll revealed that 97% of my friends have never even heard of Build to Rent and what’s more alarming is that of the 3% that have heard of it, only 1% understand the concept.
This demonstrates one of the greatest challenges faced by the sector, as without a clear understanding of the BTR offer there is a risk of potential customers being turned away by the higher price. Through research into the rental market, in partnership with SAY Property, Conductor found that for the majority of renters price is the first thing the they look at, however, 87% of those interviewed would happily pay 10% more for extra services.
Unfortunately, without the target audience understanding what is included in the higher priced BTR offer, developers and operators run the risk of pricing themselves out of the market, and this risk is only heightened by Gordon’s observation that when buying land ‘BTR investors either lose out or are forced to pay a higher price, which must then be recouped through higher rents’.
In order to combat these issues the sector needs to come together to better explain the BTR offer to misinformed audiences by outlining its numerous benefits, such as increased security, communal spaces and flexible leases to name just a few. Once consumers are aware of the benefits, they are less likely to be turned off by the seemingly higher rental costs, as is evidenced through the popularity of the US multifamily market. A more mature market than the UK’s BTR sector, America’s multifamily market has had over 25 years for its audience to understand its offer, and as a result renting is seen as an attractive lifestyle choice for all demographics.
So how do we bridge this 25-year gap and collectively educate the rental market? Perhaps one of the best ways to start is by changing where the conversations surrounding BTR happen. Discussions with my peers on where we get our information from put Instagram and Twitter at the top of the list, naturally, but also highlighted the amount of time we spend reading online magazines, music reviews, news sites and blogs. By tapping into the platforms and publications that our audiences are consuming we can start to erase of the misunderstanding surrounding the BTR concept and educate people on what this growing sector has to offer.
A Gen Z perspective on homeownership
In a recent article on Generation Z our founder, Charlotte Steedman, said that ”Gen Z-ers see renting as a stepping stone to the ultimate goal of homeownership”. As one of the older members of this cohort, I know this to be true, and wanted to offer my own view on the rent/buy debate.
As a 22-year-old renter in central London, the prospect of homeownership is something I think about often, and I’m not alone. I recently carried out a Twitter poll and when asked whether their goal was to rent indefinitely or rent whilst saving to buy, 97% of respondents under the age of 23 voted in favour of saving to buy.
I am one of four girls in a rented house with the shared desire to become homeowners by the age of 30. Optimistic? Perhaps, but when I posed the question of renting or buying to my housemates the response was overwhelmingly in favour of owning a home, and when I asked why: ‘We don’t want to spend the rest of our lives wasting hard earned money on rent’.
This highlights a fundamental difference in spending attitudes between Millennials and Gen Z-ers, addressed by Jeff Fromm in an article for Forbes. Fromm claims that the millennial viewpoint of “it’s not worth it” has been traded in for a mind-set which says “you have to earn it”, something I relate to hugely. Where our millennial predecessors were hesitant to spend on material goods, valuing experience over ownership and thus more open to renting as a long-term option, we are happy to spend money on something that we have worked hard for and see buying a property as a difficult but achievable goal.
Growing up in a recession has caused Gen Z-ers such as myself to have a practical approach to living, another key driver in our quest for home ownership. My personal desire to buy comes not only from a want for stability, but from the knowledge that buying a home is an investment for the future.
As it stands, getting on the property ladder by the age of 30 is a hard and sometimes impossible task, which is why building affordable houses for the next generation of homeowners needs to start now.