The social impact of BTR

From gyms, pools, gardens and co-working spaces to group litter picking, charity fund raising and book clubs, the build to rent (BTR) sector is founded on the provision of social value and community.

The over-arching purpose of BTR is to create thriving communities of tenants whose willingness to utilise space and engage with neighbours goes beyond the mere occupation of a building. Done in the right way, the design, placement and use of a BTR scheme has the power to drive real social impact, bringing landlords, tenants, local authorities and local business owners together to connect people, drive footfall, revive underused areas and join up with local needs.  

People and planet

Social value also extends to the sustainability agenda, with BTR investors and operators increasingly needing to demonstrate how their schemes are helping to support net zero targets. Sustainability measures need to be factored in at design stage, be it through locally sourced materials or energy saving features. Over time, the sustainability performance of a scheme will undoubtedly ripple through to investment valuations.

Flexibility needs to be built into designs from the start so that new technologies can be accommodated as and when they come to market, allowing BTR landlords and communities to evolve their buildings’ uses over time and adapt to their changing needs - decarbonisation needs to be a part of that. 

However, the preparedness of tenants to pay what amounts to a green premium for their rents is still up for debate and arguably – for the time being at least – only a factor when sustainability measures are aligned to financial savings, for example when related to energy bills. With the BTR sector still in its infancy and currently making up only 1.5% of UK homes for rent (albeit in high growth phase), the concept of a green premium is unlikely to have fully shown itself just yet. But as the market matures and a greater range of stock becomes available, tenants will have an enhanced ability to vote with their feet, with environmental credentials becoming much more of a differentiating factor. As we are seeing with offices, there will be a flight to quality in BTR and tenants will increasingly make choices based on how their landlords are valuing the planet. 

The need to future proof buildings now is critical for investors as it will have a direct impact on future valuations and occupancy rates, helping to ensure their buildings are still performing in 10-20 years’ time. 

More than just a product

For all the talk of high growth and investment yield, it is worth acknowledging that, different to commercial real estate assets, a BTR product is also a person’s home. As such, there is a human element to this investment vehicle that requires BTR landlords to have a heightened focus on social responsibility, as well as a stronger connection with their tenants, in order to build trust and brand loyalty. 

The cost of living, isolation and wellbeing are just a few of the issues that BTR landlords need to have an eye on, ensuring regular communication with tenants and offering support where they can. Doing so will drive lease renewals and boost customer satisfaction surveys. 

Having a focus on how tenants are viewed and treated is a big shift from the commercial sector and an important consideration for new entrants coming into BTR.

Driving diversity

The BPF and UKAA’s recent Who Lives in Build-to-Rent 2022 report showed that 75% of residents are aged 34 or younger. Add to that the inherent pressure on design standardisation to realise cost efficiencies and reduce overheads and there is a growing challenge for the BTR sector to ensure greater diversity of tenant and for it to appeal more to different demographics.

There is also potential for the sector to look at blending schemes to have different unit types targeted at a mix of demographics and ages, such as retirement, care, student and affordable. Doing so would help create more integrated communities, support social value and move away from the current homogenous approach that is focused primarily on younger professionals and a small number of young families.  

Such schemes would need to be located in areas that appeal to a range of customer types with varying needs, and able to connect communities with local businesses, leisure districts and transport infrastructure. Through having this holistic perspective and working with local authorities and residents, the BTR sector could begin to redefine what ‘place’ means for a town or city. 

Designed for life

Social value cannot simply be achieved through the construction and occupation of a residential building. It is difficult for tenants to create a sense of community themselves and to develop relationships with their neighbours. 

Architects, planners and developers have a role in facilitating this, creating spaces that actively put tenants in contact with each other. Corridors and lifts aren’t great places for generating conversation, so we need to think more creatively about how we use the space beyond the four walls of a residential unit.

Tenants want to be able to access space in which they feel comfortable enough to be in their slippers. They want natural daylight, areas to go with their children, a place to work. Offering a variety of accessible amenity and communal spaces is essential in a post-Covid world to make possible the convenient meeting of people. 

We need to reconsider how we use the home, right from the design and planning stage, to make it bigger than it’s been before. The home of the future can be a meeting place, a coming together of minds, a shared experience. Not just a place to eat, sleep and watch TV. 

In that regard, BTR can be a social value trailblazer. 


This information is for general information purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. Please contact us for specific advice on your circumstances. © Shoosmiths LLP 2024.


Investing in Living Report

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