The desire to achieve a set price within market rate, in a defined city location with the same spec throughout may lead some to assume this, but there is a lot more that is considered when costing up these schemes than those not familiar with PRS might expect.
Firstly, there is market demand to consider. New research by the British Property Federation (BPF) and Savills shows that the number of build-to-rent (BTR) homes under construction or in planning is more than four times the total that have so far been built – an indication of how quickly this sector is growing. The same report shows that London currently holds the highest rate of PRS housing models, accounting for more than two thirds of the 13,277 existing BTR homes. Exciting for this sector is the strong indication of growth across regions with over two thirds of BTR schemes under construction outside of the UK’s capital city, Manchester, Liverpool and Edinburgh being prime examples.
Understanding Pricing Matrices
Successful PRS schemes understand the need to create a demand based product, not a supply based product. Each scheme must be unique and fit into its local surroundings rather than an off the shelf standardised design and specification. There is no one product that fits all requirements and aspirations.
Areas to capture include:
- Community Engagement
When designing products and deciding upon specifications it is important to consider the location in terms of its history, heritage and culture as well as understanding the demographic of the local population. Developers should consult directly with the locals to determine their aspirations, views and opinions on the local community and the product you are currently designing and producing for them.
When designing products and deciding upon specifications it is important to consider the location in terms of its history, heritage and culture...Hub did exactly this with their Taberner House development in Croydon. Recognising the need to engage with the local community, understand their needs, what works and what doesn’t, they spend time with their consultants attending local schools, local events, inviting people in the allocated development area to presentation evenings, generating feedback sessions all of which informed the designs, particularly the reconfiguration of the Queen’s Gardens.
- Deciding on a Specification
There is no ‘one size fits all’. The PRS model is all about fun living and easy living. What is unique about the PRS model is that it is creating small communities and the objective of the PRS operators is to make the life of the customer as easy as possible as well as providing the best facilities. These two key points are often seen as greater attractions that the actual specification of the apartments (its kitchens, bathrooms, floor and ceiling finishes):
Facilities / community: The PRS product is often noted by its focus on shared facilities such as roof terraces, communal rooms, games rooms and lounges. Some operators put on events where all tenants are invited to join, have fun and socialise together as a small community.
Life as easy as possible: Competition amongst PRS Operators to provide the best and easiest to use services often driving by the operating platform. For instance an app where you operate most of your house from including calling for laundry services, ordering food and drink. Ie more than just renting a property.
- Flexibility of build
Developers should never lose sight of the fact they are creating homes for real people to live in. As the model develops it allows for greater change in the build and design. PRS schemes often have more living space not just within the apartment but around community areas. Each model being slightly different based on community factors and location. But there can be even more to the success of a PRS model.
For example, to meet the London Housing Design Guide (LHDG) requirement for private amenity space per dwelling, often a balcony is bolted onto a building. When you drive around London at any one time and take a survey of how many balconies are being occupied the percentage is not only extremely minor but almost non-existent. It would appear therefore that balconies are being driven by policy compliance rather than consumer demand. I wonder if, rather than having a balcony to each apartment, the apartments were slightly oversized and the area of balcony was created into a larger lounge or some other internal space, this would create more of an appeal to the consumer?
PRS schemes often have more living space not just within the apartment but around community areas.As PRS continues to evolve, developers and planners should too. Following my simple example, we should be looking to create developments where different styles are provided rather than one style replicated. As an example, a PRS building that had some balcony apartments and some oversized apartments would demonstrate that the PRS sector is providing choice and flexibility and can reach out to more consumers and offer more choice to them.
Building on Success
Keys to success is the linkup between the Developer who produces the layouts and specifications and the PRS Operator who provides the operating platform and the management services during occupation. The Developer will need to design a building that gives the Operator the required flexibility, such as enough back of house space, to carry out the functions they require to manage and operate a great product and provide the easy life and the fun life that the tenants are looking for.
Calculating the Cost of PRS
As I have said, there is no ‘one size fits all’ for PRS, but we know what elements drive and can affect the cost, how we can reduce the cost or make the build more efficient and how to stay on budget. We have significant experience of PRS schemes, from which we have built up a strong data base of costs. We were one of the first to work on the PRS model. Our team has since grown, delivering more and more PRS across London, the Midlands and Scotland – we know & understand, we deliver and we excel on delivering on cost within this thriving sector of the residential market.