Build to rent – at scale – is a PRS sector whose time has come for London, with ‘pivotal shifts’ in customer demand and policy leading to record numbers of projects having been started during 2015. But more attention should be paid to design, maintenance and ‘holistic’ management if it is to flourish and become more of an answer to the capital’s housing crisis.
Those were some of the key messages to arise from an NLA breakfast talk just before Christmas kicked off by Argent partner Richard Meier, who said that although England has always been a nation of homeowners, the world was changing. Rental is ‘taking up the slack’ in London with more people facing problems in getting mortgages and changes in stamp duty, said Meier, but also through a growth in more opting to rent for ‘lifestyle’ reasons or a quest for ‘freedom’. Argent is looking to include more build to rent schemes in its projects at Brent Cross and Tottenham, as a ‘chassis’, that is flexible and meets local demand. But families and those in the squeezed middle represent the challenge in London, said Meier, along with making the vast majority of schemes so far – office to resi conversions – look more like people’s homes. ‘Yes, we can go out and build a building, but can we actually manage it and offer a great service provision as well’, asked Meier.
For Félicie Krikler, Director, Assael designing for sale and rent are two different animals, the first concentrating on capital values on the completion of the development and the second on net operating income. But there are many typologies of building and development in the rental sector, not just ‘glitzy towers’. The focus should be towards creating schemes which are efficient and sustainable to reduce the cost of operation, with schemes more akin to the hospitality sector, and fostering ‘a sense of community’. This can include shared spaces and clubrooms or roof amenities as at the practice’s project at Creekside Wharf in Greenwich.
But it is in management that major advances can be made, said Pinnacle group director of places Lesley Roberts. Traditional models have led to ‘fragmented objectives and disconnected visions’, she said, leading to poor rates of return and limited investment in large-scale residential. ‘By contrast we see successful long-term management being about joined-up thinking and alignment of interests’, she said. The firm looks at the area more ‘holistically’, managing tenure blind, utilising IT and brand loyalty but concentrating on ‘lifestyle, convenience, ease’. This leads to better placemaking, higher occupancy, lower churn, and ultimately happy customers and more investment into the large-scale, build to rent sector, she said.
Finally, Carter Jonas head of research Darren Yates said last year was a record one for PRS in starts and completions, accounting for 60% of all starts in the last five years, half of it in office to residential. Hotspots include Newham, Tower Hamlets and Southwark, with Croydon a big player in outer London - albeit expressing concerns about how much office space is being lost. Yates concluded that financing must subsidise supply rather than demand, on planning a new tenure class must be considered, and on engaging the potential of housing associations must be maximised, design guidelines promoted and landlord licensing encouraged.
By David Taylor, Editor, NLQ.