MEMO to the Build-to-Rent Profession.

My Views on Build-to-Rent Operational Transparency and Why it's Important to tell the TRUTH

 

Whilst it's acceptable to promote your business with a degree of hyperbole and even to allude to yourself as the ever popular 'cat's whiskers', it's important to remember one of the key factors in our still nascent sector.

Data.

Data and the reporting of that data has to represent the truth.

The difference between BTR and every other residential or quasi-residential division is that we can no longer rely upon the quality of the data that the sector has produced in the past. It simply isn't good, or reliable, enough.

If we are promoting a quantum leap in design, build and management, then that leap must be mirrored in the way we control and disseminate the truth around performance. I'm not really interested in the commercial sensitivity argument as that's simply camouflaging the real issues.

One of the attributes of BTR that really appeals to me is the integrity of the data. It sets BTR apart from every other residential division and it bring us in line with the commercial world. The professional world. The accuracy and granularity of BTR data is crucial to the health and growth of the sector. It drives investment and gives comfort to fund managers managing £billions of assets. Whatever your role within the sector is, ultimately the value of BTR will be determined by the participation of institutions; both home grown and from the four corners of the world. That participation depends on the veracity of the data.

So why, knowing all that, are we still seeing elements of our incredibly exciting sector unable to shake off the old residential habits of 'smoke and mirrors?' Perhaps this behaviour is inevitable, perhaps I'm expecting too much. This is the residential sector after all. Leopards don't change their spots do they....

Well, they're just going to have to. The advances in prop-tech and reporting are going to make it harder and harder to support insupportable performance claims. Whether it's build costs, amenity success, income levels, absorption rates, occupancy levels, voids, churn, life cycle values, maintenance, leakage etc...

At the moment, given the infancy of our business we have to be most rigorous around reporting our leasing up activity. It's tempting to claim extraordinary absorption rates at elevated rents. But those reports must be genuine and they must be rigorous. If they are not, we not only deceive ourselves but we begin to lay the foundations of a sector built on sand. A sector not based on empirical evidence but on what we wish our competitors and/or potential clients to believe. We, as representing the newest and potentially the most important asset class this country has seen in decades, cannot afford that. It will diminish our efforts, undermine our value and compromise our integrity. More importantly, we will lose the confidence of the investors. And, if we lose that, we lose everything.

So, let's stick to our originally espoused values of openness and collaboration. Let's share data, let's be honest about performance and let's be honest with ourselves. We owe it to the future of BTR.

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© Richard Berridge