Delivering Flexible Rentals and Maturing Yields 

Only a few years ago, the idea of flexible rentals was a relatively new concept. The concept of an Airbnb in an estate or large development was very much in its ‘trial stage’ – with different cases experiencing varying degrees of success.  

The market has since matured, and flexible rentals – including Build-to-Rent – are becoming an increasingly important part of development strategies moving forward. 

So how has this market matured, and what are the obstacles that still need overcoming?  

 

The challenges facing the Build-to-Rent industry 

  • Higher hurdle rates: With interest rates where they are today, combined with the need to quickly get developments through planning stages through to development, hurdle rates are naturally high. Given this, investors are looking for better returns. One way to deliver this is to ensure all aspects of a development are analysed throughout its lifecycle in order to achieve the best pos ible yield. 

  • Lots of supply coming onstream: With a rapidly maturing market and word-of-mouth appraisals generating increased interest in the Build-to-Rent world, supply is steadily growing – and with it, competition. 

  • High percentages of students: Flexible living attracts many different types of people, and a particularly large cohort of them are students. But when you’re trying to build a community of professionals, it’s important to use demography to your advantage. 

 

Flexible rentals are maturing and are part of strategic approaches of BTR/multi-family worldwide 

Flexible rentals can help optimise and maximise properties across the short, medium and long term, helping to fulfil a property’s potential every day. 

They can range from as little as three nights to up to six months. Shorter stays in particular can be very effective in bringing business travellers and corporates into developments – which is a great way to attract the types of footfall that not only make for great communities but deliver higher yields. 

This drives an overall higher occupancy rate, which in turn increases revenue.  

 

Yields improve in line with your strategic approach – when delivered professionally 

While the Build-to-Rent market is still relatively nascent in the UK, in North America the multi-family segment is years ahead – and there’s a lot for us to learn from that market. 

In this established sector, owners and operators are making flexible living a part of their development strategy from the outset. This means planning with lease-up periods in mind, taking entire sections of a development and dedicating them to flexible rentals on a permanent basis – typically between 10% and 20% of the total area of a development. 

 Taking these lessons and applying them to the UK market effectively is crucial. UnderTheDoormat works with corporates who book stays via the Global Distribution System (GDS). This channel allows us to get this new audience – corporate travellers – into developments who otherwise would never have set foot there. Some of these guests have even converted from short-term visitors to long-term tenants – and this conversion helps reduce acquisition costs. 

 

A unique and flexible offer for Build-to-Rent 

UnderTheDoormat provides a combination of services to help people access the market: 

  • Fully Managed Service: This is for those who want to focus on their core business and delegate management to professionals. UnderTheDoormat manages the entire process end-to-end – this includes serviced living developments from large institutional real estate owners. 

  • Software Only/Software+Service: This is for those who want to operate themselves with the added benefit of great tech. Our technology arm, Hospiria, provides property management software (PMS) that gives property owners and operators access to short and mid[1]term rental demand whilst delivering a scalable hospitality experience.  

  • Connecting to $156B corporate travel platform: Trusted Stays is the world’s first industry platform to access the GDS for this type of inventory. This links the Build-to-Rent industry with the corporate market for short and medium-term rentals – providing access to a market that our industry has been coveting for many years. 

 

Net of all costs, flexible rentals deliver an incremental yield to Build-to-Rent developments 

Having been in the market for a while, UnderTheDoormat has seen yields increase across several types of units. Studios and one-bedroom units deliver a solid incremental yield, but it’s the larger two and three-bedroom units that have the largest incremental yields because they are not in direct competition with hotels. 

 

Flexible living within Build-to-Rent 

The flexibility of allowing for short, mid and long-term leases in the Build-to-Rent market offers renters unprecedented freedom. Renters can also benefit from a ‘try-before-you-buy’ offer, where they can experience a new home before committing to a long-term contract. 

For owners and developers, the benefits include the potential to convert short-term guests into repeat bookers or longer-term residents, the ability to monetise vacant units, and maximising revenue while minimising management

Get in touch

If you want to discover how UnderTheDoormat Group can help you deliver improved yields and increased revenue, get in touch with Lisa today who would love to get to know you and your business.