Against this backdrop, private individual landlords, institutional landlords and investors are all looking to attract and retain tenants. And to ensure their various portfolios work, they need to understand what occupants want from a rental property – understand tenant motivations, likes and dislikes and what they might pay a premium for.
A recent report from our in-house research team had this in mind. The team collected responses from over 300 tenants living in urban and rural settings and flats, and houses. The findings provide a comprehensive insight into tenant drivers and requirements.
There is a notable increase in tenants living in flats and houses who feel that sustainable energy measures are now an ‘essential’: 21% of respondents in flats said this in 2019, compared with 15% in 2017. This feature has moved up three places and is now considered more important than en-suite bathrooms or fitted wardrobes for the majority of our flat respondents. The growing cost of utilities and rising energy prices (gas & electricity bills have increased around 3% in real terms over the last two years to the end of 2018), combined with a heightened awareness of our daily impact on the climate and wider environment, is likely having an impact on renter priorities.
The research also found that high-speed broadband is considered essential for a rental property, even more so than a modernised kitchen or bathroom.
One of the key questions asked what tenants would pay more for. This is particularly relevant in the current environment where an ever-increasing number of BTR developments and units have been developed or are coming on stream.
According to the British Property Federation (BPF) there are around 143,000 BTR units either completed or planned across the UK with research suggesting that given the extra amenities these units offer, there is an associated rental premium of around 9%.
It is, therefore, crucial to understand just what it is that tenants are willing to pay a little extra for. While the current consensus is that BTR schemes can achieve higher rents because they offer features such as concierge service, communal spaces and an on-site gym, our flat respondents showed that these were of little added value. Only 12% of people saying they would pay more for an on-site gym and just 5% and 3% would pay more for a concierge and communal space, respectively.
Encouragingly however 19% of our respondents said they would be willing to pay more for a newly refurbished kitchen or bathroom. Given that most build to rent units (in this country anyway) are relatively new, this is something which would garner a rental premium without a BTR developer having to change anything.
On the other hand, there were some features flagged that the average BTR development may struggle to achieve. While 14% of respondents said they would be willing to pay more for outside space, many BTR schemes are flats and can only provide a balcony/terrace and communal gardens. Allocated parking can also be hard to incorporate into new developments; space issues and wider planning difficulties make it harder for schemes to include too much in the way of vehicle parking, although 12% of our respondents said they would pay more for this luxury.
Looking to the future, one of the most frequent responses related to improving the condition and quality standards of rental properties. Additionally, many tenants would like to have greater flexibility and control over the property. Rental properties in the UK do not traditionally allow for pets or redecoration of the interior, and this came up as an issue to improve going forward. The introduction of some form of rent control system was also flagged as one of the changes tenants would like made in the sector- this issue is already high on the agenda and being discussed by a number of political parties.
Given the current climate, insights such as this are more vital than ever. By understanding tenants and their key requirements, we can go some way towards helping to shape the sector, to better accommodate these needs.
If you would like to discuss the findings of our survey, or any of your property requirements, please contact Carter Jonas.