Welcome back to our latest Q&A series. In January, UK Build to Rent interviewed Debra Yudolph & Esme Webb of SAY Property Consulting LLP on Build to Rent management. The interview was conducted by video call and consequently provided us with a lot of content. So, we have decided to split this interview into two parts. We hope you enjoy part one of our conversation with Debra & Esme.
SAY Property Consulting is an award-winning advisory business specifically established to provide residential, commercial and mixed use management consultancy services to developers, investors and property owners.
In 2021, SAY launched hereSAY, the first mystery shopping service that benchmarks the viewing experience across the Build to Rent industry in the UK. The hereSAY Mystery Shopping Report 2021 reveals key findings and insights into the viewing experience in Build to Rent as well as key recommendations for those looking to improve their lettings experience.
About
Debra has over 25 years’ experience in residential property. Before founding SAY, Debra was at Grainger plc for ten years as Director of Asset and Property Management. Debra is an expert in residential property and asset management with a focus on BTR & improving the customer experience and investor returns.
About
Esme joined SAY in October 2020, after 3 years as Head of Operations for property start-up Flyp. During this time, Esme was responsible for residential assets in eight UK cities, building up a wealth of experience in property management, customer service and operational best-practice. She specialises in operational scaling and efficiency, with a focus on technology led solutions.
Q: It appears that the BTR sector has continued its openness in information sharing to an extent that we haven’t witnessed in other UK property sectors. Why do you think this is and how do we ensure this ethos continues?
Debra: I think it’s because it’s a small market with relatively few players at the moment. There’s also been a lot of people changing jobs. I think that creates more sharing. People have become less paranoid about their information and are naturally sharing more. The fact that the industry has progressed, become more established and people are moving from place to place has actually really helped. I think that’s the American influence. There are quite a few Americans working here in the UK & they’re used to sharing – they have a different attitude and are much more open. Also, the likes of the UKAA and UK Build to Rent have helped because it enables people to have a platform to share on.
However, I also think that Covid has made a massive difference to the industry because when the pandemic started, no one knew what they were doing from an operational perspective and so there was a real feeling of coming together. Again, I think the UKAA did a really good job of bringing people together to solve those problems.
Everyone was in the same boat and no one was trying to make money out of it and therefore there was a different attitude.
That was because of unprecedented times, but we need to keep that approach. We see it in our everyday life – I now have a neighbours whatsapp group where people are just giving things away and that didn’t happen before Covid. There’s been a shift culturally in how we share.
UKBTR: What do you see as being a threat to this current openness & sharing of knowledge?
Debra: There’s a lot of information out there but when someone comes up with a really innovative idea that’s been challenging to make happen then understandably, they become a bit more cagey about sharing information about it.
However, for things like data, we could share more of that as an industry. I think we are seeing this more and more and I hope that the industry can see that the benefits outweigh the risks. When times get tough and there’s real competition people might become more secretive. It didn’t happen in America though, so you never know.
Q: What are some of the USPs that you have seen in developments through your mystery shopping programme that have really wowed you? And, how have you seen their USPs marketed?
Esme: My view is that in BTR (hereSAY) what is being offered is actually fairly homogenous. Obviously, we see tiers, but there’s not much that stands out. The packages are fairly standardised bar some exceptions such as a swimming pool.
Something we really learnt in the secret shopping is whatever those USPs are, there’s a very clear lack of ability to communicate them in BTR specifically when compared to private landlords. That’s really where people are failing.
They’re not highlighting ‘we’re the landlord, this is what we’ll do for you, this is why we’re better than going to your private landlord’.
They’re also failing to highlight those key amenities and incentives. We found 60% of viewings that we carried out, viewers weren’t even told who the landlord was! So there’s a massive opportunity there even though it seems simple and obvious.
The other thing is that we’ve found from the potential tenants perspective, they see the quality of the buildings as really high but, it’s across the board and therefore it’s the customer service that is going to provide that ‘wow’ factor and be a key differentiator. With the products being so similar within each price bracket, it’s service that is going to ensure a development stands out.
UKBTR: So there’s a benchmark offering from all players but management is where people are going to excel… How do you think the BTR industry can expose that message? What do you think is missing that we’re not quite grasping in terms of getting this message to the right demographic?
Debra: What’s really interesting is that at that granular level, when you’re engaging with a potential customer, the key messaging of BTR (the benefits and the USPs) are not being discussed, pretty much at all. So there’s the industry level and then the individual level and on both counts, in our experience – the industry is failing on both.
As an industry, we don’t think about the acquisition of the customer like other industries do. We need to think differently about what the messaging is and make sure that at every touch point it’s consistent.
When visiting the websites it’s all about the building and the amenities, but the trouble is they’re not very differentiated. There may be slight differences here and there but it’s a bit like shopping in Harrods or Poundland… you can get the same product in both shops but the difference is in the customer experience and that’s where I think the industry really has to become more sophisticated.
There are examples of really good management and service, specifically using technology to communicate with the residents and speed things up as well as good social media campaigns and engagements. But, the messaging is not very consistent.
Esme: I also think that the general public don’t understand that BTR has been created to directly address issues that people have had when renting. Those very personal, emotive experiences that people have when renting – like a terrible experience with a horrible landlord who doesn’t fix a window for months. BTR has been so purposefully built to solve these problems. Everyone runs into those issues at some point in their lives and if people could understand this is a direct fix, then they would be more enticed. I don’t think people see it that way. I don’t think the people understand why they should care.
Debra: When you look at the student world, the serviced apartment world, they did two things. 1. They had very clear messaging about the benefits and 2. they collected data and they used that data to promote what they were doing. Build to Rent hasn’t done that very well.
Q: When reviewing a scheme, how do you ensure the health and wellbeing of the tenant is considered and how important will this be to top tier management in 2022?
Debra: We look at health & wellbeing through design for management and we are looking at launching a broader ESG (Environmental, Social & Governance) design and operational report. Generally, the principles of ESG are not being embedded in the design and therefore are not being delivered through the operation of the scheme.
Too often, people think about health & wellbeing as ‘oh we’ll just put a gym in’. Covid actually got everyone thinking about mental health and some did a great job of supporting their residents with heir mental health during the pandemic.
Moda were ahead of the curve because they had already partnered up with an organisation to provide support. That really encouraged other people to do it & that was really positive. We need to talk about health & wellbeing more broadly. Even developments without a gym, we can still deliver health & wellbeing in a different way. I think that if there was a clearer strategy delivered and embedded it would be better.
UKBTR: If you were to say health & wellbeing isn’t amenities, it’s XYZ… What would you like to see the industry acknowledging as health & wellbeing?
Esme: I think that when you come back to the foundations of good mental health, you need stability and security. So it’s nice to say ‘you can have yoga’ and yes that stuff is great too, but the number one way as a landlord you can have a positive impact on a tenants life is to give them a really secure, safe home. That has to be foundational because yoga isn’t going to fix your landlord driving you up the wall! I think that’s really important.
UKBTR: I completely agree, it sounds like your talking about Maslow’s hierarchy of needs. The physiological & safety needs have to be met first before you move up to that next level.
Debra: I think that BTR does that well but we just don’t present it that way and it’s about how the message is communicated. Generally that frictionless lifestyle (which is sometimes how we refer to it) is much easier in Build to Rent than if you’re renting from a private landlord. We should link it much more consistently than we do because actually, we’re doing it but we’re not talking about it.
Esme, you mentioned trust which I think is a very interesting word because actually, in order to have improved mental health and less anxiety, trust is a really big thing. The operators in BTR could easily build a level of trust, more so than other landlords, but again it’s not communicated very well. It certainly isn’t from our experience with mystery shopping.
Esme: Also, as things get more competitive for example, in Elephant and Castle, where we see people hopping from one building to the next, tenants getting their month and half free rent, living out the tenancy and then moving on to the next one – landlords will need to think carefully about how to secure renewals.
People will probably start hopping around more and more. But the more you build that trust, where tenants know their neighbours, they know the building manager, they trust them & believe that they’re going to service their needs… Well that’s going to be the thing that makes people stay isn’t it?
UKBTR: That’s a really good point. If a tenant is planning on getting 1.5 months free, staying for 6 months and moving on, but you’ve connected with them day in day out… If they go to look around other developments and don’t quite get the same vibe? That connection could be the deciding factor for someone extending their stay.
Q: What are some examples you’ve seen of additional tenant incentives that have achieved an increase in rental premium for a development?
Debra: This is an area that needs more research and data because it’s still very difficult to attribute tenant initiatives to rental value. It’s clear that there is a premium for BTR but it’s difficult to attribute the premium to anything specific. And, although we know the overall customer experience helps to attract and retain people, we don’t know that it helps to achieve a premium rent.
We know links to transport definitely contributes… but the problem with the market is that it is so seasonal. There are so many aspects that make up the value you achieve that it’s really difficult to pinpoint if it’s an incentive. It would be great if we could!
UKBTR: I thought this would be difficult to answer because it’s a unique answer for every person… Each tenant will pay more for different things…
Debra: I think that where you can attribute value onto something it’s much easier. We’ve been doing some work on co-living and the model is an all inclusive rent. We’ve been figuring out how to take out the all inclusive bit. Firstly, to get people to understand what the costs are, because they’re really significant. Secondly, it’s difficult to explain the cost when people are just looking at a baseline rent, it’s very misleading.
As we know, inclusive rents have mostly disappeared because they didn’t really work. When people can say ‘the WIFI would normally cost me X and I would usually spend Y on the gym’, it’s easy to analyse the rental uplift. But it’s difficult to analyse other aspects like events for example.
What’s interesting is the clear difference when looking at student rents for something like NIDO, compared with regular student accommodation. The quality of accommodation is quite similar, there’s not a huge difference in the space you get. From the customers perspective, it probably doesn’t feel much different and yet, they get such a premium. It’s to do with the pastural care element. That is something we need to think more carefully about in BTR because there’s a value to it. Perhaps co-living will be what really helps enforce that opinion because the premiums expected for co-living are really quite significant.
Also, it would be quite interesting to see schemes where you have some BTR and some For Sale with investor landlords, but two identical blocks. Perhaps then we’ll have a really good case study.
A Big Thank You to Debra & Esme…
hereSAY’s Mystery Shopping Report 2021 is available to purchase now by contacting Esme at esme@sayproperty.co.uk
If you have any other questions regarding this interview, you can reach out to SAY here.
Our content calendar has enough free space for one or two more contributors to this series. If you feel you would offer value and have experience in build to rent investment, design, management or ESG – contact us here.
Thank you for reading. Stay tuned for part 2 of the interview.