Lockdown measures have left the UK’s residential rental sector struggling to deal with a period of unpaid rents, occupancy voids, and considerable operational difficulties. And with the pandemic far from over, such issues will continue to persist.
Moreover, given that up to 90% of the UK’s private rented sector (PRS) is made up of single-property landlords, the sector will need to mature, adapt, and strengthen in order to overcome the pandemic.
Yet, rather than dwell on the negatives, we must consider how the market can change for the better, and fast-track changes in PRS that benefit investors, landlords, and tenants in the wake of the virus.
Despite the UK government’s pleas for us to return to the office, an impending second wave suggests that a return to normal life won’t be quite so straightforward. In fact, fewer people have returned to the office in the UK than any other major European country, with 82% of businesses planning to stick with remote working practices for the foreseeable future.
This drastic change in working practices will have a significant impact on the UK’s resi rental sector, with tenants expected to turn away from high-cost city centres. Instead, tenants are likely to search out better value for money in smaller towns and cities, as a sudden spike in interest in areas such as Milton Keynes, Watford and Harrow has demonstrated.
As such, this largely transient sector will have to adapt, too — resi investment will no longer be as simple as buying up properties, certain to be filled by an abundance of professionals and students in the UK’s business hubs and university towns.
Instead, smarter investment will be needed in high-quality properties that will encourage stability as the home merges with the office (as well as contracts that offer tenants the flexibility that they will need to get through the economic struggles). In return, landlords will begin to see the long-term, stable income that PRS can provide re-established.
Despite the damage caused, Covid-19 will also present opportunities for landlords and investors. However, any future investment will need to consider how demands have changed due to the pandemic.
This is where technology can play a crucial role in supporting investors during their decision-making processes. At Skwire, we are already using artificial intelligence algorithms to predict a property’s rental revenue with 90% plus accuracy, ensuring that our funds are only spent on high-yield assets.
In the UK, property investors also have the luxury of access to Europe’s leading PropTech market. As reported by the University of Oxford’s Saïd Business School, the UK PropTech sector has attracted more funding than any of its European counterparts by a considerable margin.
With more than 800 start-ups currently developing solutions that simplify the purchase and management of real estate, we should therefore use the tools available to us to make smarter, technology-led decisions that improve the resi rental market…and not just for ourselves.
Improving the tenant experience
Landlords should therefore consider how technology can be embedded into properties to improve the tenant experience. From property management systems designed to log issues and complaints, to robust connectivity infrastructure to keep residents online — such offerings will prove vital as tenants spend a greater amount of time at home.
Likewise, there will be additional pressure on landlords to ensure public areas are safe for tenants. With the World Health Organization (WHO) having warned that coronavirus can survive on surfaces for up to 72 hours, high contact points such as door handles and lift buttons – hotbeds for germs – will face more scrutiny from tenants.
Contactless solutions, including motion or voice-activated technologies, would offer a straightforward solution that helps to alleviate heightened health and safety fears.
Making the most of change
It is evident that Covid-19 will change the resi rental sector. Now we must ensure that this change occurs in a way that benefits the entire ecosystem.
Until now, the UK’s resi rental market has been in the shadow of its European neighbours, offering tenants less, for more, and with few protections. This is an opportunity to change that.
By making appropriate use of proptech and ensuring that investment is being spent in the right places, we can improve the quality of our rental housing stock, continue to meet changing tenant demands, and bring some stability back to the market.
*Elisabeth Kohlbach is founder and CEO of Skwire, which focuses on tech-driven residential property investments
This post has originally been featured in Property Investor Today.