The classic idea of British home-life would be the dream of owning your own home; something nice but perhaps not too difficult to clean, a large garden, but not so much that you spend all day mowing, fun and interesting neighbours, but never anybody too noisy.
The average Briton has maintained this dream for decades — but recent societal changes have meant that many people are finding themselves eschewing from traditional homeownership, and instead opting to rent due to the more convenient and cost-effective lifestyle it can bring.
A 2018 study found that an estimated third of all young Brits will remain in rented accommodation throughout their lives. For many the answer could lie in PRS property, or multi-family homes.
What does PRS Stand for in Property?
The Private Rented Sector, or PRS property, is a type of housing in the UK that is privately owned by a landlord and leased out to residents. Typically in a PRS property, the resident will deal directly with either a sole landlord, or with a management company/estate agency acting on their behalf.
The type of home constituting a PRS property can vary, from a flat in Hackney to a luxurious detached four bed home in The Cotswolds. When it comes to the Private Rented Sector, variety is the spice of life.
However, recently the PRS property market has become challenged by an upstart from across the pond, Built to Rent. BTR originated in Central Europe and in the United States, where it is more common for tenants to stay in one property for periods of up to 10 years plus.
BTR properties are often new-build apartment blocks, designed specifically to cater for the rental market. Let and managed by a professional company, which takes care of leasing, day-to-day maintenance, resident experience, and high occupancy rates / operating profits.
Both started out like a game of Monopoly, taking chunks of the other’s market share and competing for the same audience, but in more recent years BTR and PRS have evolved and become separate entities that market to different people. One is playing draughts, while the other is playing chess, and both are seeing great success.
In fact, BTR has grown so much that it has even spawned its own sub-divisions, such as multi-family.
The Evolution of PRS Property
The world of PRS property is ever-changing. Back in 2017, it became evident that the PRS market needed to evolve in order to keep up with changing trends. We noted this at the time, when we stated: “Young professionals in the city want to raise families in mixed, vibrant communities. What’s more, ‘culture-hungry silver surfers’ have more money, and wish to spend it in the city. All these demands require a radical overhauling of the PRS market.”
That is exactly what happened. Since then, the popularity of BTR property has grown so much that it has split away from PRS entirely and is now its own entity. PRS has also sub-categorised into areas such as HMO and co-living arrangements.
Today, the main area of BTR is multi-family, which involves one building designed to be able to comfortably fit multiple families, or individuals. The people working and living in these properties have all the space they need, and commonly have access to facilities like a gym, communal working spaces, and in some cases even a shop.
One of the main appeals of a multi-family development is the sense of community it can bring. It is the neighbours stopping to chat if they arrive home at the same time, it is children playing together and growing up in the same space.
Nowadays, modern tenants want leisure, luxury, camaraderie, and comfort, and they are willing to pay a premium if these things are available. It is important to create a space that stands out and offers amenities that go above and beyond the “norm”. These include:
On site events
Communal spaces (gyms/gardens etc.)
Bespoke furniture and fittings
Additional emphases on excellent interior design
Is Multi-Family the Future for PRS?
As we touched on earlier, BTR has gone beyond keeping occupancy rates high and tenancy voids low. It is now about putting the comfort and happiness of residents at the forefront of everything you do.
Put simply, the happier and more settled a resident is in their surroundings, the more likely they are to stay on in their property — thereby decreasing the risk of tenancy voids. After all, the process of moving home can be incredibly stressful, so most residents will look to avoid having to go through it if possible, particularly families with children.
Indeed, research has shown that families tend to stay in rented accommodation for at least three years — much more than the 12-month timescale usually enjoyed by renters of more traditional PRS properties. For this to happen, it is essential to ensure that their children are happy and they feel stable in their environment. Multi-family developments give accommodation providers the opportunity to do just that.
The concept of multi-family dwellings is nothing new. It has been thriving on the continent for decades. A recent article in the Financial Times references the Unité d’Habitation — a modernist community building in Marseille that was constructed all the way back in 1952. The article spoke of a resident who had lived in the complex for over 60 years. They commented they were able to find everything they needed in one place and didn’t really need to leave. Even the building’s roof offered the chance to be outdoors without requiring that residents ever need to exit.
This building has stood for close to 70 years, but represents a concept that had never truly been tested to the degree it was in the last 18 months. The COVID-19 lockdown proved the first genuine trial to its all-encompassing concept since it was first built. Residents of the Unite d’Habitation were forced to go about their day exclusively within the confines of the building for months on end. And it passed with flying colours.
This utopian concrete building developed over 68 years ago was able to categorically prove the viability of the multi-family housing concept that has spread across Europe and the world in the most comprehensive, stripped down way possible.
Buildings in the same style have gone up across some of Europe’s and the world’s most prestigious cities; from Berlin to Warsaw, Paris to Cleveland. There are multiple examples of buildings of this type in the UK, such as the Barbican Estate and Isokon Building in London.
Now that the concept of multi-family homes has made great strides in the UK, it is important for PRS to evolve once more so it can future-proof itself from BTR.
The Impact of BTR on PRS Landlords
The rapid introduction and rise of Build to Rent and multi-family developments in the UK has not only affected what residents are coming to expect in a rental property, it has also had a huge impact on PRS landlords.
Indeed, the recent change in residents’ expectations and requirements has seen them flock to BTR properties because of their additional amenities and luxuries. This is why traditional landlords must raise the standards of their interiors, to keep up with, and complement the BTR market.
Consumers are still interested in smaller, self-contained units, but only if the quality/feel of the property and furniture is of the required standard. Taking lead from the BTR goldrush should result in PRS landlords focussing more on delivering a similar level of care and finished product at a smaller single/two unit level.
Back in 2017 we saw this shift in the industry coming: “The popular trend of supplying boutique hotel style accommodation for permanent residence is fast becoming bland. As demographics change, the UK PRS market will not always want ‘student accommodation for grown-ups’. The build-to-rent sector needs to start taking lessons from the German and US PRS models and start creating homes for tenants, and putting their wellbeing at the centre.”
What Does the Future Hold for PRS?
Looking to the future, PRS will be wanting to capitalise and ride the wave of momentum that BTR has enjoyed in recent years. While BTR has had multi-family homes to thank for its increasing popularity, PRS has a different model to aspire to.
This rising star is the single-family home, which is building a foothold in the market and growing in popularity and viability all the time. Some of the key features of a single-family development compared to multi-family are:
Larger space to accommodate different needs
Locations found on outskirts of city in areas with superior local infrastructure
Different amenities such as outdoor spaces and play areas for children
This new type of development is aimed at and caters to families, particularly young families aged 30-45. This demographic, previously relatively inaccessible to the traditional rental market, has suddenly opened up to PRS landlords. No longer are families using rental properties as a stop-gap until they buy their own home, they are now looking more and more to the rental market to provide the same level of comfort and environment that only used to be found in properties they had purchased. This is where the single-family model can really come into its own.
So, instead of multi-family being the future of PRS, the reality is that it is actually the single-family model that PRS landlords need to take inspiration from. Landlords will need to get their properties to a point where they offer a viable and convenient alternative to home-ownership for these young family units.
To do so, landlords need to be able to create environments that will encourage tenants to stay longer at a property, to make it their home — instead of just somewhere to rent.
LOFT Brings BTR Mentality to the PRS Market
Ultimately, one of the core features of BTR properties is the transformation of interiors from blank canvases into functional, flawless spaces designed for comfortable, sustainable, community-focused living. This all starts with People First interior design, Planet First procurement, and an experienced project management team.
LOFT can furnish entire housing complexes with hundreds of unique apartments and spaces. Our team is capable of fitting out every room, making each one feel like a home fit for any occupier; from students, to young professionals, families of all ages and those who have retired.
We have managed the interior design and furnishings for the funds and developers behind Homeviews Resident Choice award winning BTR schemes for Dandara Living, Grainger Plc and Moorfield / Allsop.
LOFT understands the importance of interior design upon human behaviour and how furnishings can make a space truly feel like a home. With 18 years experience in the PRS and BTR marketplaces, including extensive work with multi-family homes, our team at LOFT is perfectly positioned to create homes, designed and furnished with the end user and the sustainability of our planet in mind.
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