A growing private rented sector means growing tenant expectations
According to the GLA, London's private rented sector now comprises around 850,000 homes, one in four Londoners, and continues to grow.
The sector is becoming a popular asset class for both institutional and private investors, and has been promoted by the government as a means to address the housing shortage throughout the country. Moreover, the sector also offers a flexible form of tenure that is popular with young people, internationals and professionals who rely on having greater mobility. As the sector grows so will tenants' expectations. As a result, the industry will be looking to offer a quality product not only to keep generation rent' happy but also to encourage others to join it.
With more properties to choose from quality is required to stop tenants looking elsewhere, however, landlords also recognise that generation rent' are renting out of choice rather than sufferance -and an opportunity exits to offer a great product that people will pay more for. Indeed, with the substantial rise in rents and house prices, the private rental market in London now encompasses a wider demographic - people from all walks of life and income brackets - with high expectations.
We recently teamed up with HemingwayDesign to furnish a number of homes at East Village, London's newest neighbourhood at the former London 2012 Athletes' Village. The Qatari Diar Delancey joint venture own 1,439 of the homes at East Village which are managed by Get Living London in the UK's largest PRS scheme.
Get Living London is looking to change the way Londoners rent by offering high-quality homes with long-term, flexible tenancies and no fees. By working with David Phillips and HemingwayDesign, they are also looking to change the image of renting by setting new standards for design and furnishing, helping them appeal to the style-conscious renters looking to move to the area.
In addition to pleasing tenants, design can make a huge difference to the return on investment. Our research shows that properties furnished to the tastes of the target market can achieve higher rental yields and significantly faster take-up. Data we collected for an investor client, with a portfolio at the nearby Skylon Building in Poplar, showed that we were able to increase the yield by 9.9 percent and reduce the average time taken to let each property from 28 days to only 8.2 days. In our experience, the consumer is absolutely buying into it.
We are talking to several large PRS developers with schemes coming to the market in 2014 and 2015, and they're all looking to see what happens at East Village. The landlords and agents we work with know that the private rented sector in London is 80-90 furnished but it's the quality of the furniture and success of the design-led approach that is attracting their attention.
With many of us being former agents ourselves, and working closely with lettings agents and property managers, we understand the importance of furnishing a property appropriately for the target market. If the landlord gets it wrong, it could seriously narrow the letting market and increase the risk of longer voids. They could also end up paying an unnecessary amount on furniture when they needn't have.
As a property manager or lettings agent you will no doubt give thought to what will help to maximise the return of your clients' investments. With a wider demographic of renters, more choice, and such a large proportion of the market now furnished, the quality and style of interior design and furnishing is an increasingly important consideration, and one that you must get right.
*Andrew Clark is Managing Director of David Phillips, a company that provides furnishing solutions to landlords and developers. Their service includes Next Day Replenishment Furniture and Appliances, Furniture Packages, Interior Design, Contract Furniture, and Rental Furniture.
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