This article was published by UK Build to Rent, as part of their Q&A series with industry leaders. They asked Sarah Tonkinson, Foxtons Managing Director of Institutional PRS and Build to Rent, a few questions on management in Build to Rent developments.
Q: It appears that the BTR (Build to Rent) sector has continued its openness in information sharing to an extent that we haven’t witnessed in other UK property sectors. Why do you think this is and how do we ensure this ethos continues?
ST: I think the sector is perceived to be open with things like headline rents and HomeViews, but not as much with concessions made in order to get the lease-up phase completed.
Information sharing is a real positive for the sector, but data is valuable and it can give your competitor an advantage. So historically, people haven’t wanted to share. First, we need to get better at anonymising data to share without being able to identify the assets.
Foxtons are London’s leading lettings agent, we complete over 25,000 tenancies per year, and 10% of those are in BTR. We also have one of the largest databases for London property. Through Foxtons Business Analytics and our work with DataLoft, we have a wealth of data coming in to create a really clear picture of the current market.
We’re working to give away as much data as we can because we know the value of insight for BTR. We have just launched our London Report, and we publish monthly lettings reports.
Q: What are some of the USP’s you’ve seen in developments and how would you ensure the message is endorsed through the business?
ST: As I always tell clients, the majority of people that tour a BtR building will love it, the question is more of whether they can afford it and whether they can compromise on location or price.
Dealing with so many operators across London, we see the difference that understanding your USP makes, whether it’s the view from the roof terrace, the community spirit or the wonderful resident manager. A great USP tells the applicant how well they’re looked after and how their needs are met.
We ensure our BTR clients’ message is endorsed by investing internally in educating our teams on the benefits of BTR. That’s really important because when an applicant doesn’t know about BTR, they need to go on a journey; see the Victorian conversion, the 10-year old new build and then the BTR.
Negotiators can introduce applicants to the BTR lifestyle that way. Relationships are useful as well, our negotiators will be walking around with a potential resident and bump into someone they’ve put there a few months back, who has heard the messaging from us before living with the benefits we’ve promised. That satisfied resident is the best kind of validation, they become an ambassador.
Q: What are some examples you’ve seen of additional tenant incentives that have achieved an increase in rental premium for a development?
ST: The most motivating ones we’ve seen are vouchers – which need to be substantial, like £1,000, so they can buy things for their new property – and rent-free incentives.
There are also community incentives, like talks and events. There’s one BtR brand we work with that does an amazing annual drinks party on their roof terrace every year and it’s become quite a grand event.
A lot of people that live in BTR are new to London, or to that area of London, so events where they can meet people and make friends are valuable.
Q: When appointed by a BTR client, what are the core investment and value metrics you assist them in improving and how do you go about this?
ST: We help maximise the rent through technology. “Avoiding the void” is the number one principal for estate agents. For years, we have helped our BTR clients avoid lengthy void periods between tenancies, ensure the right price to get residents in as soon as possible and maximise the operators’ investment.
Tenancy lengths as well – often BTR operators will offer a three-year contract, but some of them include a 12-month break clause. If you’re avoiding a void, you don’t want apartments to become available at, for example, Christmastime, so instead of doing a 12-month contract, we’ll push for 15.
The average tenancy across our portfolio (not just BTR), is about 15.3 months as an initial contract and then 22.5 months with renewal. We want people to commit longer because there’s a cost to the operator for cleaning, checking in and out, making the apartment over from the previous tenants and all that.
Residents are in the same boat – there are real costs associated with moving. So it’s beneficial on both sides for residents to stay longer.
Q: Technology within developments and the proptech sector are growing at an exponential rate. In your opinion, what is the most valuable technology to the leasing and management process you use and what efficiencies does this provide your team?
ST: Foxtons are a totally paperless agency. We’ve developed My Foxtons, which houses everything for our applicants in an online portal – from viewings to making an offer, to getting your references, to moving in – and enables us to transact at speed. That’s a benefit BTR residents appreciate because it relates to their preference for a 24-hour service at home.
We’ll set the precedent in their application process, weaving human and technology touchpoints through their experience to provide fast, responsive, 24-hour support. It provides a smooth transition into the service their new BtR apartment offers.
We benefit our BTR operators by gamifying the process – we can get a quicker commitment from applicants, and a more efficient move into settling and on-boarding them. It’s useful to provide a smooth customer experience from beginning to end, because we’re representing the development as an extension of their team.
We need to illustrate what life there will be like from the first instance, give the resident the same level of support they’ll receive throughout their tenancy, so their experience remains consistent.
Q: Over the last 5 years we have seen a surge in BTR development and investment– what areas of the country do you see as being undervalued openings to create outstanding rental opportunities in 2022 and why?
ST: This may be a well-trodden path, but it’s the Russell Group university cities: Oxford, Cambridge, Bristol, Bath, Manchester, Liverpool, Leeds, Southampton… In those areas, it’s not only student accommodation, but also the ecosystems around those university towns.
That’s where the opportunity is, and where there are some huge housing shortages. Of course, Foxtons are London-focussed, so that’s just from understanding the market and answering questions for our clients.
Q: BTR management has the potential to be an outstanding career choice. How do you think we can educate the right people with the right message on the benefits of being a part of this sector?
- Who are the right people?
- What is the message?
- How do management companies retain them?
ST: If you ask most people working in property how they ended up here, it was by happy accident.
I don’t think the property market advertises itself as well as sectors like tech, banking and law. People don’t necessarily think of property as a career choice. There are also so many career paths within property, and BTR particularly.
Who are the right people? We’ve got account property managers who understand what it takes to look after a tenancy. In BTR, there’s a lot of recruitment from the hospitality sector for positions like resident managers, but having an understanding of residential property can be a huge asset, too.
What is the message? BTR is an exciting space right now. It’s not in its infancy anymore, it’s in its childhood. Momentum is building and so much is going to happen in the next 10-15 years, it’s going to be really rewarding work.
As I said before, the sector needs to educate potential residents on what BtR is and what differentiates it from private renting. However, they also need to get employees on board with that message. In my experience, working in BTR is not just about money, it’s about being part of something new. There’s an employee benefit to strong branding within BTR, when your employees can describe what your brand values are and get behind what your brand stands for – it’s about creating a culture.
How do management companies retain them? They retain employees by making it exciting, by getting them behind the message, by showing them a worthwhile career path and by looking after them.
At Foxtons, we have a policy of promoting internally. We show our entry level employees roadmaps to advancing their career. Having done multiple jobs and worked through the ranks at Foxtons, you know, I’m definitely included in that. It gave me a knowledge-base for all those different parts of the business, so I can empathise and manage from a position of experience.
