Here, we zone in on the operators responsible for managing these schemes – which are very often large in scale and complex in layout, with many different aspects to consider and a tenant population who have been promised a bespoke, personal, better-than-average service.
Very often, this includes 24-hour concierge, free parking, bike storage, communal facilities such as gyms, gardens, cinemas and workspaces, and areas such as residents’ lounges and bars.
Coronavirus is likely to pose significant challenges to the management of these schemes – which often promote their social events calendars and sense of community as a main selling point – but who are the main players in this space?
Some investors/developers have their own in-house management teams, but very often they will hire the services of specialist BTR property management companies to look after their assets and keep tenants happy.
The residential property management firm, one of the biggest in the UK, says that a successful BTR scheme ‘demands a seamless, end-to-end approach that supports the entire building and those who live there’.
Its Build to Rent proposition aims to deliver an ‘integrated solution that spans skilled consultancy, property and asset management, residential services, tenancy and lettings management’.
It argues that its three decades of experience in ‘crafting specialist property and asset management strategies to deliver operating returns’ makes it the obvious choice, with its ethos being underpinned by strong health and safety standards, open and transparent communication and ‘healthy estate finances’.
In February last year, it was revealed that US investor Viventi Capital was planning to inject £100 million into the UK’s growing BTR market, with FirstPort on board as its management partner. Plans were put in place for developing sites across the UK ranging from 250 to 400 units.
While Viventi has set out its delivery model, long-term vision and a BTR delivery platform to ensure a long-term pipeline of projects to fulfil its objective to become a leading national developer and operator of UK rented homes, there is no evidence that it has sourced, acquired or developed any sites as of yet.
One of the world’s biggest and most instantly recognisable property companies, Savills – as well as carrying out lots of research into the BTR market – also plays an active role in offering BTR management.
The firm with the iconic yellow branding says it works within the private rental sector, ‘delivering a bespoke service from design to management of mid to large-scale residential developments’.
On its website, it states: “Our team has a well-deserved reputation for consistent delivery and for launching new developments in the sector. We have long-standing experience of delivering the service at the sharp end, day in, day out, making sure that we’re about practical delivery rather than just theory, available to all residential property portfolios, large or small.”
The independent property consultancy – which has been operating large-scale residential portfolios for more than 20 years – has become a well-known name in the BTR management sphere thanks to its tie-up with Moorfield Group and developer Glenbrook on a number of schemes.
This means it manages The Duet in Salford Quays (270 units with rooftop garden, gym, residents’ lounge and post/parcel room), The Trilogy in Manchester (232 units with workspaces, terraced gardens and 24/7 concierge) and The Forge in Newcastle (283 apartments with ultrafast broadband, integrated lockers and gym facilities).
In a boost to its profile, The Trilogy was awarded ‘Best Place to Rent’ in the UK by HomeViews, which independently surveyed more than 5,000 residents living in 84 BTR developments across the country.
A leading residential rental and management company, based in Leeds, LIV is working on BTR schemes all across the country, from London to Glasgow.
This includes schemes it is leasing now in Bradford, Bracknell, Crawley, Stevenage, Leeds and Bedford, as well as schemes it is offering project consultancy on in Manchester, Liverpool, Sheffield, Glasgow, Birmingham and Salford.
It is leasing now on the Clarendon Quarter scheme in Leeds and is offering project consultancy on Moda Living’s 450-unit Angel Gardens scheme in Manchester. As well as Moda, it also counts M&G Real Estate as a client.
LIV – which was acquired by Atlanta-based Cortland, specialists in multifamily living, in August last year – currently operates more than 2,000 BTR homes nationwide, with a further 7,000 in the pipeline and set to be delivered by the end of 2021.
Places for People/Touchstone
A placemaking and regeneration company which exists to ‘create places that work for everyone’, Places for People announced a £550 million BTR fund in March 2018 through its fund management business, PfP Capital.
The fund was seeded with three major residential development schemes across the UK, valued at approximately £150 million, forward-funded through a special purpose vehicle, ‘prior to introducing long-term capital through the Fund’.
At the time, a press release announcing the fund said it expected that, once fully invested, it would have forward-funded 3,000 homes across six to eight high-quality, large-scale schemes in regional towns and cities.
Places for People’s market rent and BTR specialist, Touchstone, was put in charge of managing the properties on behalf of the Fund. While Touchstone Agent Services is part of a huge operation that manages at least 21,000 properties, including those for institutional portfolio and BTR clients, it’s hard to find information on how many BTR units it manages, where they are, or what has become of the fund promising 3,000 homes across six to eight sites.
The Manchester-based residential lettings agency has carved out a key role in the BTR sector. In 2018, Grainger appointed Ascend as its sole lettings partner for Clippers Quay at Salford Quays, which has performed strongly for investors in recent months.
It was also appointed in 2019 as lettings agent for the Europa Capital-funded, 44-storey Anaconda Cut scheme, the tallest building in Salford.
Earlier this year, the BTR specialist reported ‘outstanding’ income increases for its client on the BTR fund it manages for Gatehouse Bank.
Ascend’s BTR property portfolio comprises two, three and four-bedroom houses across the North West and the Midlands. It has grown its team to a 90-strong unit, with significant investment in its dedicated BTR asset management department. By 2022, the firm expects to grow the number of BTR properties it manages to over 10,000.
“Build to Rent is a primary focus for us moving forwards and it continues to present fantastic opportunities for the growth of our company,” Ged McPartlin, managing director of Ascend, said in early April.
“Our expert team’s substantial branch presence in key locations, such as Manchester, Liverpool, Salford, Leeds and the Midlands, is grounded by strong in-house capabilities, which give us a competitive advantage. We look forward to building on these robust foundations to further grow our BTR portfolio into 2020 and beyond.”
During the height of the coronavirus pandemic, we ran a piece from Rory Cramer – co-founder of review platform HomeViews – outlining why it was crucial for the BTR sector to invest properly in property management.
Cramer concluded his piece by saying: “It’s important that we learn from the current resident feedback, as well as the innovative responses to the coronavirus from successful BTR operators. One thing’s for sure; get the property management right and the building is likely to prosper – crucial as renting becomes more of a long-term prospect for many.”
BTR currently accounts for a tiny part of the overall private rented sector, with the vast majority of homes operated by individual buy-to-let landlords. However, there have been suggestions that BTR’s growth will be significant in the coming years as more institutional investors and corporate landlords seek a piece of an increasingly lucrative pie.
Like all parts of the property market, though, BTR hasn’t been free from the disruption caused by the coronavirus pandemic. In Savills’ UK BTR Market Update – Q1 2020, it said a strong start to the year had been derailed by Covid-19.
“However, the fundamentals underpinning investment in the UK private rental market have not changed. Build to Rent is likely to see a short-term impact on landlord revenues but longer-term the coronavirus lockdown is unlikely to dampen investors’ growing appetite for the sector,” it said.
The first quarter of 2020 witnessed a large number of BTR homes completing across the country, with the amount of completed stock increasing by 42% in the latest 12 months, the largest year-on-year increase since Q4 2018, and amounting to an extra 12,800 homes per year.
The total planning pipeline currently stands at just under 81,000 homes, including those in the pre-application stage.
According to Savills, just over 40,000 homes have already gained planning permission but have not yet started construction, indicating a healthy supply of homes in waiting. Six schemes started construction in Q1 2020, totalling around 1,600 homes.
It will only come clearer in the coming months just how dramatically Covid-19 has affected the momentum of BTR.
This post has originally been featured in Property Investor Today.