There was a time when one could be forgiven for thinking that the BTR market was dead before it had truly begun. With the majority of BTR homes being situated in the capital city and the pandemic causing its inhabitants to seek a more rural lifestyle, the lack of developments outside of metropolises surely meant this search for pastures new served private landlords and homeowners better, providing a welcome space for people to work remotely and surround themselves with a more natural environment.

However, with the UK real estate market defying widespread predictions of a crash, and increased investment in the BTR sector seeing year-on-year growth, it may have come as a surprise to see this space evolve into what Iain calls ‘BTR 4.0.’ With these specifically built properties swelling in suburban areas, and city life making a comeback following the lifting of Covid restrictions, the sky is unquestionably the limit.

Here comes BTR 4.0 

Iain manages the BTR Consultancy business for Cortland in Europe, currently covering the UK, Ireland, and Spain. As a vertically integrated, multifamily real estate group, his team covers the apartment living experience from concept to completion, all the while staying entirely focused on delivering resident-centric, hospitality driven service. In this way, they can ensure the best possible projects are built and that all the elements needed to create a thriving community underpin the standards they set themselves.

“BTR has evolved tremendously over the past 10 years,” Iain said, “going from a largely unregulated industry to one that’s incredibly thoughtful in design and customer service. BTR 4.0 is where we stand today — the industry now goes beyond investing in ground-up projects designed with renting and life in mind; we’re seeing a focus on ESG factors largely in response to COP26.” 

This type of development is putting such emphasis on customer service that it is one of the main reasons why renters wish to move away from the PRS, with recent research from the HomeOwners Alliance indicating that 40% of those surveyed would prefer to rent “directly from a responsible company or housing provider” than a private landlord or lettings agent. The same report also found more than one-third stating that compliance with energy efficiency standards would contribute to the betterment of their experience. With the attention now on improving environmental design and energy use, the progression of BTR has certainly come at the right time.

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“We can see a linear evolution of the residential market,” Iain continued, “away from broken blocks with absent BTL landlords to a professionally designed and managed customer-centric residential experience, where you are living your best life with minimal impact on the environment.”

Iain summarised the origins of BTR as mostly permitted development schemes, where city centre office buildings were converted into homes under a single owner-operator. “It was very light on amenity and with a moderate focus on service.” 

The second version, or ‘BTR 2.0’, saw an improvement in facilities, owing to financial support from institutional or investment fund owner-operators, and a new concentration on customer service. 

Subsequently, ‘BTR 3.0’ saw an even clearer emphasis on these two points, in addition to the emergence of ground-up development and better apartment typology — such as equally sized bedrooms. 

“BTR 4.0 is 3.0 with a huge shift in focus on ESG,” Iain reiterated. “There is significant improvement in environmental design, energy use, proptech, whole life (lifecycle) and accreditations to prove it, such as LEED, Well, WiredScore and Active Score. The undercurrent would be that the residential rental market has never been more coordinated and motivated to deliver an affordable product at scale for the long-term enjoyment of the people who live in them. Gone is the ‘build-sell-bye’ world.”

Cortland’s first UK BTR scheme, Cortland Cassiobury, was a fine example of the resident-focused management service the development consultancy company quickly became renowned for in the US. In the past five years, it has grown to be a major property management provider in the UK, designing properties and creating communities that appeal to the nation’s renters.

“There are two kinds of developers,” Iain elaborated. “The one who wants to build and sell to the owner-operator, and the owner-operator developer who will ultimately build and own the property. Ultimately, both projects end up in long-term institutionally backed ownership.” The difference between them, and what sets businesses such as Cortland apart from others, is the attention paid to customer experience during the design, build, own and operate phases of a scheme.

What impact will a rise in BTR popularity have on the traditional BTL space? 

Cortland Consult collates industry data and enables the company to consider what the future may look like for both BTR and build to sell (BTS), with a view on best serving its clients. Iain revealed that, if the figures in the UK are anything to go by, the opportunity for a customer-focused renter experience is there for the taking.

“The desire of many Gen Z to future Gen A consumers is to move away from an ownership model towards an ‘on-demand’ living experience, mirroring their Uber, Deliveroo, Netflix and technology-driven lifestyle. BTR is ideally placed to satisfy this need, and indeed our numbers tell us that demand outstrips supply.”

Echoing a point he’d previously made, Iain stipulated that the spotlight on ESG was also indicative of a positive choice being made by environmentally conscious future generations, in which the environmental, social and wellness offer that BTR 4.0 provides would factor in to their living decisions. Additionally, the cost of living crisis we find ourselves in could exacerbate the move away from renting the UK’s historic, draughty and economically unfriendly housing stock to the shiny saviors of well-designed buildings.   

“BTR isn’t the whole solution to the government’s levelling up focus,” Iain concluded, “but it plays a significant part. In order to tackle the housing crisis, we simply need more houses — and we do that by diversifying the housing and private rental markets in order to grow.”