02 July 2020
The impact of Covid-19 has been felt far and wide over the last few months and will continue to be felt for the foreseeable future.
Many sectors have been forced to adjust to the changes and challenges thrust upon them by the crisis in order to keep going. Some have unfortunately had to put their operations on hold until the pandemic passes.
Others, such as logistics/deliveries, technology (e.g. video conferencing) and home improvements, have excelled, either because there’s still been a demand for their offering or they’ve been able to adapt their outputs to meet demand. Meanwhile, retail, hospitality and transport (particularly airlines) are among the sectors that have ground to a halt.
As for the residential property sector, it’s been a tale of two halves – property sales have slumped while interest in rental properties has soared.
In fact, based on widespread industry speculation and commentary and our own observations, the Build to Rent (BTR) market has been particularly buoyant. (For more insight on this, read article, ‘Why Covid-19 could represent a coming of age for Build to Rent.’)
However, for all of the resilience it has shown in recent weeks, the world of BTR is in a totally different place to where it was pre-Covid-19. Like many other sectors, it has had to respond to issues and circumstances, many of which have never been encountered until now.
Some of the changes are temporary and some will remain post-Covid-19.
Key considerations shaping the management of BTR developments
Backlog of enquiries
The world essentially being put on hold for three months has created backlogs in so many areas, yet property viewings have been booked at better than expected levels thanks to remote viewing options.
While visits have understandably been lower than usual, this hasn’t stopped people from making enquiries. Over the next couple of months, as sites start to reopen and operations resume, it’s anticipated there will be an upsurge in viewings of rental properties, driven by this pent-up demand.
Those who want to move and may struggle to get a mortgage at present, may find BTR more of an attractive option, especially as it’s a short-term commitment compared to taking on a 25 to 30-year+ mortgage.
In the current mortgage market, only four providers are still offering high Loan to Value (LTV) mortgage options compared to 30 previously. Furthermore, Clydesdale Bank and Virgin Money have withdrawn their 10% deposit options from the market, leaving first-time buyers more distant than ever from home ownership.
The aspirations of 20 to 40-year-olds struggling to get their foot on the property ladder were slowly changing anyway, but even more so given the current economic climate.
It’s increasingly becoming the norm for people to aspire to live in high quality, professionally managed developments, regardless of the type of tenure, with long-term rental of great properties becoming as desirable as home ownership.
We all know that technology has been one of the winners during the pandemic, especially the platforms that have enabled people to stay connected for work and keep in touch with their friends and family.
The use of technology and virtual aids will undoubtedly continue to be a major factor within property management going forward. A more efficient technology infrastructure will be required, such as enhanced Wi-Fi and 5G phone signals, and intuitive services, such as secure hands-free postal delivery.
The look and feel of shared spaces will have to change too, so that they are more geared around functionality, which technology has the potential to greatly assist with. The focus will continue to be on people just as much and properties, particularly in relation to supporting and updating customers, and using technology to enable this to happen.
BTR has come a long way in the last few months, and is set to evolve even further as the world gradually gets back to the new ‘normal’ and new demands, trends and challenges emerge.
Ultimately, the widening mortgage gap and the appeal of greater flexibility will drive the demand for quality, professionally managed rental homes. The post-Covid-19 world provides a great opportunity for BTR to continue to move with the times and deliver on its commitment to change the rental market.