Essential lessons learnt from block management visionaries diversifying into Build-to-Rent
In a recent News On The Block knowledge bank event “Diversifying into Build-to-Rent: Lessons learnt from block management visionaries”, a panel of industry experts discussed how they have successfully diversified into the exciting Build-to-Rent sector.
The panellists shared their experiences making the move from block management into BTR, and the lessons they learnt along the way.
Build-to-Rent is an appealing opportunity for block managers
With rapid growth in BTR across both single and multi-family developments, and fast diffusion from London into the regions, it’s clear that the asset class is on an upward trajectory. The panellists were clear that the opportunity afforded by build-to-rent was one they couldn’t resist.
Outside of the high levels of demand, the industry experts also saw BTR as an opportunity to build on their existing commitments to customer service and community building, and they felt that BTR offered the chance to focus on this to a much higher degree than in leasehold block management.
- Build-to-Rent managers need end-to-end control
A key difference in BTR compared to leasehold block management is the need for an end-to-end view of the entire process, from handover through lettings and into ongoing management. The panellists discussed, with differing opinions, the pros and cons of using a branch-based estate agent network to support the letting process. This is a function that many block managers don’t have unless they are part of a larger group; however, having a dedicated leasing team was seen by some as an advantage to providing the best service over utilising local agents that may not be fully focused on the specific asset’s needs.
While education and collaboration are important, the experts were in favour of a hybrid approach to letting BTR properties that combined branch-based agents with their own teams. By playing a more active role in the lettings process, it’s possible for BTR managers to increase the focus on vetting applicants, selecting “the right tenants, not just the first tenants” for a particular development.
- Client relationships are more nuanced and collaborative
A feature of BTR that the panellists found particularly appealing was the more collaborative nature of client and investor relationships. With BTR prompting a focus not just on the management of a block’s life cycle as an asset, but on the development of long-term value to residents with the goal of promoting tenant retention and loyalty, many have experienced a more positive and proactive relationship with their institutional clients.
The increased importance of customer experience is prompting a shift away from a purely cost-based focus amongst clients, with a greater willingness to invest in areas which improve the resident experience. It’s also prompting a greater focus on ESG, as clients who expect to be involved in BTR developments for the long haul are prioritising efficiency factors like EPC ratings, not only to meet resident demand but to secure their own long-term success.
- Reporting and data can’t be underestimated
With a greater level of client involvement and a deeper focus on resident experience, it’s no surprise that the panellists have experienced a significant increase in data and reporting demands from BTR compared to leasehold block management. As well as standard financial and project life cycle reporting, clients are increasingly requesting demographic and customer satisfaction data, as well as taking a more granular approach to BTR reporting across the board.
While the data demands are significant, the experts did feel that the quality of analysis and insight of this data was lacking in places. With the asset class still very young, approaches to measuring performance have yet to be standardised, and property managers are cautious about sharing data and best practice for fear of losing competitive advantage. The panellists pointed to more mature BTR markets such as the USA as examples of what the future holds for UK BTR, but stressed that the sector still has a long way to go.
- Customer expectations are much higher than in leasehold
A key difference between BTR and leasehold block management is the level of resident expectations, and the panellists all stressed that the biggest shift in approach for them was a vastly increased focus on customer experience. While the opportunity to build stronger communities is an appealing one for block managers and a key driver of their entry into BTR, keeping up with expectations around the resident experience is a challenge for those accustomed to a slower pace of expectations in the block management sector.
With the tenant journey starting much earlier than in leasehold and carrying on beyond the move-in date to cover ongoing repairs and maintenance, BTR managers are finding that technologies like self-service portals and tenant apps are indispensable. While leasehold tenants may not have been as engaged with these platforms, they’re seen as key to delivering on BTR tenant expectations, as well as building a community in single family rental developments which do not have an on-site building manager or concierge to do this in person.
- Integrated technology is key
While the panellists all saw BTR as a booming sector with a bright future, they were clear that block managers moving into this new asset class face a steep learning curve. Each expert saw technology as a critical precursor to their success in BTR and agreed that the increased demands of BTR had led to an acceleration in their own technical roadmaps.
The panellists stressed the need for a tech stack that encompassed every aspect of the BTR life cycle, from marketing and leasing to property/tenancy management and client accounting. With so many disparate aspects and the need for a robust overall resident experience, integration of these different platforms is key. BTR managers need their systems to talk to one another and provide a single source of truth, streamlining processes to maximise efficiency and ensure that teams were able to focus on delivering exceptional customer service and building strong communities in their BTR developments.
At MRI Software, we’re passionate about helping you leverage technology to drive greater operational efficiency and better customer and client experience. To find out more about how our solutions could help you diversify into new asset classes like Build-to-Rent, download our MRI Living eBook.
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