What do renters really value?
The Build to Rent (BTR) market – where new homes are built solely for rent, not to buy – has been booming lately, with double digit yearly growth (pre pandemic).
With supply of rental properties weak and many priced out of home ownership, BTR landlords have traditionally found it easy to fill their units (hence the model’s popularity with investors).
But with more availability and choice, many developers now face competition for renters. Which raises the question: what do renters truly want and value? And what are they willing to pay a premium for?
We conducted a study in 2018 for an architecture firm who wanted to give their clients an edge over the competition. What we found may surprise you.
The model
Many BTR developers offer a so-called ‘lifestyle’ product, where they offer extra services and features in return for a higher rent. This ranges from free Wifi and bills included, to large communal spaces and even cinema rooms.
We started by asking the obvious question: ‘If you were looking for a new place to rent within your budget what would be most important to you?’
Data was collected online between 8th February 2018 and 15th February 2018 by Forefront Market Research.
Needs versus wants
Perhaps unsurprisingly the traditional, practical considerations of location, space and service were ranked the highest.
71% of respondents listed location as the most important factor. The condition of the property came in second with 60%. Amount of interior space (39%), parking (38%) and quality of interior space (38%) were also highly ranked.
Length of tenancy (34%), pets allowed (32%), level of deposit (31%), and speed of landlord repairs (21%) were also ranked as important factors .
Lifestyle factors didn’t feature as high priorities. Things like private balcony space (5%), age of the building (8%), access to communal space (5%), opportunity to make new friends (4%) and bills included (15%) were all ranked as low priorities.
Key finding: The lifestyle BTR developers are trying to sell – with the associated design choices – is not the priority for current renters.
What might people want?
We then wanted to see if people would prioritise different factors if money was no longer part of the equation. Might as aspirational mindset change the picture?
We asked: ‘If you got a pay-rise tomorrow and you could afford a bigger budget for your next rental, what would be most important to you?’ and offered a smaller range of options to try to get a better understanding of people’s priorities.
As with the first set of results, location and interior space were ranked the highest factors with a combined 81%. Communal exterior space and ‘community feel’ came in with under 5%.
Data was collected online between 8th February 2018 and 15th February 2018 by Forefront Market Research.
Key finding: The data suggests that people would still hold the same priorities even if they had more money to spend. It raises questions about design choices for developers – why invest in an on-site bar, for example, when people really want a bigger place close to the Tube?
What do renters expect to be included and what might they be willing to pay extra for?
We asked two questions to help differentiate between what people consider to be standard, and premium – a key aspect of the BTR model.
The first question helps us to determine a baseline of expectations, whereas the second question seeks to uncover which premium services may be viable.
Data was collected online between 8th February 2018 and 15th February 2018 by Forefront Market Research.
Of the baseline expectations, maintenance topped the rankings with 73% and parking came in second with 47%. It’s worth noting that many items that weren’t considered standard in the past are now being perceived as being part of a standard rental package, with internet (15%) satellite/cable TV (9%) and house cleaning (6%) all being ranked – albeit not very high.
Data was collected online between 8th February 2018 and 15th February 2018 by Forefront Market Research.
Of the premium services, free Wi-Fi (46%) and more storage (34%) topped the results, followed by choosing a decoration pack at 24%. Down the list we saw a cinema room (8%), a car club service (3%) and a business lounge (1%).
Key finding: As with our other findings, practical options were valued higher than ‘lifestyle’ options.
What does this all mean for BTR developers?
As with anything property related, it really is ‘location, location, location’. But beyond where to build the scheme (which is influenced by a lot of immovable factors, like land availability, planning rules etc) are there any other differentiators that can help give BTR developers the edge?
This suggests some very clear design priorities for the marketplace that are focused on the delivering the practical needs of renters, rather than trying to create a premium ‘lifestyle’ product that many simply do not value.
It also suggests that branding is important. A recognisable BTR brand that sought to hit some of these points would, on this evidence, resonate with a large section of renters. A brand that stressed quality, reliability and flexibility. Perhaps a John Lewis of the rental world….?
