Will build-to-rent make traditional letting agents redundant?
Industry figure Lesley Roberts says agents do have a role to play in build-to-rent, but margins and business models will have to change as the market consolidates.
A leading build-to-rent industry figure has reassured traditional letting agents that there will be a role for them as this emerging type of rental property eats up more and more of the sector.
But Lesley Roberts, who is a partner at property management giant Allsop, also warns that they may have to adjust how they do business to win build-to-rent clients.
Roberts admits it may be a while before build-to-rent begins to wield real power within the rental sector, but says Savills’ recent guesstimate of it taking half the market is within the realms of possibility.
So far in the UK 40,000 units have been completed and a further 110,000 are in the pipeline or have planning permission, a tiny fraction of the 4.5 million properties owned by private landlords.
“If you’ve got a really large build-to-rent block then I think you’re a bit arrogant to think you can find tenants for it all on your own,” says Roberts.
“Letting agents provide a fantastic service to the sector particularly when you need to top up, and they do have special skills and the ability to reach out to a wider market.”
But Roberts says letting agents will have to adapt to this new market, and that if they assume that everything is going to remain the same, doing business will become increasingly difficult as build to rent becomes more dominant.
Pricing structure
She also suggests that letting agents will, like travel agents, have to become both more specialist and alter their pricing.
“If letting agents take too larger a slice of the pie and squeeze operators, then using third-parties to source tenants will become unviable,” she says.
Roberts says agents will have to become more efficient and also embrace proptech more – as with so many huge build to rent apartment blocks coming on stream, it will be a letting agent’s ability to take on higher volumes of rentals that will appeal to the operators.
Read about the recent surge in build to rent construction.
Build to rent is for sure a developing market place, and the curtailment of private landlords due to taxation etc, might in one sense mean that investment/pension funded institutions perceive brand new property stock is a juicy prize. As the article states though the Private landlord accounts for 4.5M properties currently tenanted, so there is a big disparity between the two pools of housing stock.
Where I do agree with Allsop is that if you have a large number of rental properties in a managed portfolio, then Proptech is an essential part of the process, the digitizing and automation of various key functions that letting agents provide.
And tech and volume or scale are happy bed fellows, as a process carried out once or three thousand times does not cost the same as a human replicating processes on this scale.