Well, we learnt that at 180 pages, it's almost twice the size of the 1st edition. We also learnt that it's possible for competitive elements of the industry to come together and share experience and information for the benefit of the industry as a whole. All presented by Alex Notay and Richard Meier of the ULI in the hallowed lecture theatre of the National Geographic Society. Very smart, very sober... very mature.
The guide is fast becoming the bible for 'Build to Rent' and is clear about the distinction between what house-builders offer and what this emerging sector should be aiming at.
Eight chapters entitled The Opportunity – The Customer – Management – Form and Layout – Sustainability, Engineering and Construction – Fit-Out Specifications – Cost and Procurement – Viability and Planning. All well considered, all proper, all essential.
What everyone agrees on is that B2R is very different: from concept, to form, to procurement and build, and subsequently management, this sector is pursuing very best practice, analysing each nuance to get it right for the consumer.......... So why aren't they doing it in practice? Because, very definitely, they're not, and because they're not the sector is disparate, divided and disorganised. The ULI guide is brilliant. It's not the whole picture, it isn't the finished product, but it's getting there. The individuals who headed each chapter group are exemplars in their field: Michela Hancock of Greystar, Mark Farmer of CAST and Chris Wheaton of Quod to name a few. But, in that lecture theatre were many who are not adhering to the principles in the guide.
How many institutions do you know who have gone out and bought house-builder stock, either existing or off plan? Well, that's not what the guide promotes. What about management? Know anyone who's got that right or indeed has a practical, workable, well resolved solution? And, if they have, how are they going to apply that model to House-builder stock that wasn't purpose built for the rental market. Some have given no thought to what happens when their customers wont pay. And there are some who still intend to employ outmoded asset management systems. I wont name them, but they know who they are and so, I would suspect, do you. What's that going to do to the NOI and yield? it's not rocket science, it's going to be compressed out of existence. If B2R is supposed to be a 'new way' why are so many crudely abusing the model to take advantage of cheap financing, Government support, compliant local authorities and hype in the market to build homes that are, basically, not B2R but deferred market sale homes. What does that say about long term commitment to the sector and to the principles first articulated by Montague in 2012? Not very much!
I suspect, given time, the market will mature and those who follow the principles set out in the guide will be successful, long term landlords with great assets that have intrinsic value far beyond that of the stock hurriedly bought from house-builders. But it's not going to happen overnight. It would help if the Government showed some direction and created a separate planning class, but Brandon Lewis made it clear that he wanted the industry to come to him to tell him what they wanted. Here, we move into the 'herding cats' scenario. Nevertheless, Government must act to give the genuine investors the time to put down deep roots, the space to make mistakes and for the sector to endure the growing pains that every nascent business must survive.
So, we learnt that there is a new business call B2R, it is supported and it's beginning to mature. We know what we must do to achieve our goals and we must support each other through the facility of the ULI. We know that there are ten's of 1000's of potential renters who would positively benefit from B2R and all that it enshrines. We mustn't be distracted or let our focus pulled by those who wear the cloak of B2R but, in reality, are looking for a quick exit.
There are some really fantastic people out there and they will drive this sector forward. We will learn from the US Multi-family experience and we will create a world class, purpose built asset that will house our fellows in security and confidence.
We learnt that we can do it and that it's coming.
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