The build-to-rent sector in the UK has been going from strength to strength with the number of completed BTR homes expected to hit 380,000 by 2032. That’s a 500% increase in 10 years. To reach this target, the BTR sector is expected to capitalise on uncertain economic conditions affecting the housing market this year, as well diversifying its offering, becoming more tech-focused and prioritising resident experience. Here’s our top 10 BTR trends to follow in 2023.
10 BTR trends to follow in 2023
- More family homes
In 2022, there was a record-breaking £4.3 billion investment in multifamily BTR units as the market responded to increased demand, dwindling housing supply and inflation-boosted mortgage rates. With few homes built targeting young families, the BTR market has stepped up. Its unique model - i.e. building near good schools suburbs with tech-run family amenities, such as booking daycare via an app - makes further inroads into the family homes market this year.
- New customer demand
In 2022, home owners faced the dual attack of rising mortgage rates and speculation around falling house prices. Meanwhile, private renters faced a 26% hike in rents thanks to demand outstripping supply. With traditional accommodation options becoming harder to find and more expensive, more people will consider their accommodation options, opening up the BTR sector to new customer segments and new locations. As such, operators will need specialised tech to offer different stay lengths to different customer segments.
- Seamless customer journey
Changing mortgage rates and fluctuating house prices has made owning or buying a home increasingly stressful. BTR is now the hassle-free alternative. Customers are looking for a slick, frictionless experience from check-in to check-out. From 360 virtual tours and digital inventory checklists at the viewing stage to controlling housekeeping rotas via an app and using a portal for extending flexible leases, the customer journey will become a key differentiator in 2023.
- Tech-led amenities
BTR’s amenities make the sector stand out; how those amenities are run makes a BTR operator stand out. From pet-friendly facilities and coworking spaces (expect more of these in 2023) to state-of-the-art gyms and beauty salons, residents want to book classes and register for events simply and collaboratively. Operators that provide a digital space for residents to set-up their own community initiatives and control their living experience will have an edge.
- Customer service/experience
While location is still key, more renters are moving to BTR as a lifestyle choice - the simplicity, the flexibility and the perks. But all those benefits count for nothing if customer service isn’t up to scratch. Renters will choose buildings with the highest customer service scores, taking into account professionally managed spaces, responsive maintenance, communication with the operator and the focus on tenant wellness and safety. For example, over 60% of London-based tenants value the ability to digitally report issues to the operator.
- Energy efficient properties
Because of astronomical costs, the past year has focused more minds towards energy usage. While newer BTR units are already more energy efficient than older homes due to design, customers are looking for additional extras, such as smart meters that track usage, and tools to control heating and cooling. Operators with smart energy monitoring can also give discounts and rewards to the residents who are most energy efficient.
- Regional variation
Over the last five years, BTR has been strong in London and urban centres with burgeoning professional sectors, such as Manchester, Birmingham and Leeds. Now, more regions are getting in on the act with 47% of local authorities adding BTR to their housing pipelines compared to 20% in 2017. Why? Well, according to Jacqui Daly, Director of Residential Research at Savills, “build-to-rent is not just about increasing housing provision, it is a major economic driver, helping attract and retain skilled workers and serving as a catalyst for urban regeneration.
- Global mindset shift
BTR’s tech-led, amenity-focused units traditionally appealed to millennials and young professionals as a living concept, but a rental mindset shift has seen its popularity grow across age groups and continents. From families and married couples to retirees and even high-net worth individuals (i.e. luxury-seeking residents who could afford home ownership), BTR’s offer of flexible, independent private living has been gaining traction across Europe, Asia, Australia and North America.
- Increasing residential crossover
Investors like good bets, so it’s no surprise that mainstream real estate companies are launching specific BTR arms to take advantage of growing tenant demand and the supply shortfall in rental homes. But it’s not just traditional home builders moving towards BTR, but coliving and serviced apartment operas too. For example, leading serviced apartment operator Flying Butler recently launched its BTR brand Mura Living with a new split development in Hemel Hempstead (80% BTR, 20% serviced apartment).
Dominic Sherry, CEO, Flying Butler and Mura Living, said: “Expectations of today’s renters are high and with our 25 years’ experience in residential services, we are well-positioned to deliver a cohesive, quality rental service for both BTR and serviced apartment guests. Thanks to res:harmonics PMS and valued tech integrations such as HubSpot, Canopy, HIVE and DocuSign, we’ve been able to support the CRM, bookings and operational demands required for this mixed use business model.”
- BTR PMS developments
As the BTR industry moves forward, so does its technology. By listening to industry feedback, taking real-life insights from BTR customers and following BTR trends (i.e. common pain points amongst customers), BTR tech partners will be making system improvements that directly benefit all BTR operators and move the needle in 2023. This year, expect to see a greater focus on tech that enhances customer experience as operators look for new ways to differentiate.
BTR marches on
BTR is best-placed among residential segments to overcome the challenges this year brings, and take a big step towards becoming a dominant force in the housing market. For advice on growing your BTR operation this year, reach out to res:harmonics.