Welcome to my mid-May blog amid an industry that seems to be opening up again – my daughter went back to her Mayfair agency office this week (and as a parent I must admit to mixed feelings about her travelling on public transport) and there has been lots of talk about risk assessments and re-opening plans on all the forums and webinars this week.
Regular readers may recall that 6 weeks ago I looked forward and claimed “There is now a huge opportunity for the Build To Rent sector to demonstrate that it can provide a better way of life for residents, a more effective way of delivering housing rapidly and a superior opportunity for investors and operators. The UKAA has a key role to play in seizing this opportunity”.
Experience since then has convinced me of this opportunity even more, and this blog looks at what I think is one of the major challenges to be faced in grasping this opportunity. But let me start off by sounding a note of caution – I’ve just come off a call about a major IT project (not for the UKAA by the way) and the project manager was asked what kept him awake at night .“The things that I don’t know” was his answer and he was right – we are operating in unprecedented times and whatever I say might be proved wrong in a few weeks. But I hope not, and I gave some thought in my blog of 1st May to how to address this concern.
But one thing we do know is that things won’t be the same in future as they were before, and this includes the dynamics of the BTR sector. How will investor appetite and customer demand stand up in the face of the impending recession and pricing challenges from hard pressed BTL landlords, what will operating costs look like in an era of social distancing and home working, how will the recovery play out in the construction sector. Ultimately the questions to answer are 1) what will happen to viability – the balance between income, capital and operating costs and 2) what operating model will be most effective going forward?
To reiterate though the fundamentals of BTR look great – Over the last two months investor appetite is up, our product is great, customer experience has been a real positive and demand for housing will exceed foreseeable supply — and history is on our side. Operators and investors have shown they are prepared to move fast – to react to challenges and change the way they work, to anticipate customer needs and put processes in place in days that would previously have taken months.
Going forward though the near future reminds me of the early days of BTR when operators and investors were also existing in an uncertain environment.
What was missing then was data and it is still in large part missing today. That is not just numbers robust data gathered across the sector in near real time, about key aspects of income, operational costs and investment returns and most importantly available to share within the industry and with stakeholders such as government. This is not to say that individual company data isn’t commercially precious to its originator, but in a nascent industry growing and still operating sub-scale, shared data can provide a guide to what good looks like and assist investors, operators and stakeholders to avoid mistakes and grow faster than they would do otherwise.
One of the most pleasing aspects of the last two months has been the willingness of organisations to share rental and voids data with the UKAA to support the BPF in discussions with government. Going forward I am really keen to continue this and for the UKAA to be at the centre of gathering and sharing data, not as an exclusive role, but working with partners from all parts of the industry including tech companies, consultancies and industry bodies and government, to produce information that provides actionable insights to guide us and help deliver the opportunity that lies before us.
The UKAA is ready to step forward to assume this role and I would ask anyone reading this who shares my ambition to join us in this quest; Whether it’s by providing data or as a member of the UKAA, everyone has a role to play and we would love to have you on board. Send us a message if you would like to discuss this or find out more.
More on this next time but in the meantime stay safe and finally, belated congratulations to Jonathon Ivory on the recent birth of twins, one better than Boris (if you’re counting that is).