As the private rented sector grows apace, it’s bringing a new approach to new build, in terms of designing and maintaining dwellings. Being largely investor driven, there’s additional emphasis on lifetime costs and asset management – and Eurocell could prove a key partner in these.
According to the latest English Housing Survey figures, published in late January, 20% of households now rent privately, a figure that rises to 30% in London. The number of people in the private rented sector (PRS) has been rising since 2002, and has more than doubled since then.
The predictions are that this proportion will continue to rise with build-to-rent developments taking a larger and larger share of the PRS market. This is certainly the Government’s intention: its policies aim to discourage rogue landlords while encouraging purpose-built and professionally managed rental homes.
The demands of build-to-rent are quite different to those of build-to-sell and we already see this playing out in the way new developments are being procured and delivered. Build-to-rent developers and investors are interested in programmes of multiple developments, rather than one-off projects; elements of offsite manufacture and standardisation; a focus on design and quality; and a greater interest in whole life costs.
According to a 2017 report by Savills, commissioned by the British Property Federation (BPF), the PRS in the UK is worth over £1 trillion. However, 98% of the market is owned by small landlords who each have 10 properties or less.
Given the shortfall in housing in the UK, institutional investors are keen to invest in this sector. With a lack of property to buy, they are developing or financing their own build-to-rent schemes at an increasing rate.
At the latest Q4 2017 count by the BPF, there were 105,214 build-to-rent homes either complete, under construction or in planning. That compared to 95,918 in September 2017 and 69,825 in the first quarter of last year.
Another trend highlighted through the BPF’s figures, compiled by Savills, is that the number of large-scale developments are on the up. There were 34 planned developments of more than 500 homes each in September 2017, compared to 24 such developments in the first quarter of 2017.
Though build-to-rent was born in London, it has quickly spread to other cities around the UK. Developers are looking for city centre sites with good transport links, close to mainline railway stations or metros.
Last month [January], Legal & General announced Brighton’s first ever build-to-rent development and the eighth city in which the insurance giant will build such a scheme. Its other sites are in Leeds, Bristol, Bath, Walthamstow, Birmingham and Salford representing around 2,000 homes and £1bn in investment.
Legal & General has even set up its own modular housing factory in Sherburn near Leeds. Affordable housing provider RHP is set to be the factory’s first customer, although to date only a prototype house has been constructed.
The first offsite-manufactured homes for RHP – tiny, one-bedroom flats – could leave the factory in the summer. But there’s no news yet about Legal & General supplying its own projects.
Offsite will also feature in £5bn-worth of developments planned by Stanhope and Network Homes over the next five years, featuring a mix of tenures including build to rent. The developers have just announced that Laing O’Rourke will be their construction partner with parts of the building such as bathrooms and balconies manufactured at Laing O’Rourke’s Explore Industrial Park facility in Worksop.
For multi-development portfolios, it’s easy to see why standardisation is important. Economies of scale may allow the capital cost of products and packages to come down, and ongoing repair and maintenance will also be more efficient and cost effective if there are fewer parts and products to work with.
Whole life costs
Specifying homes that will become an asset for investors, rather than sold on to individual buyers does require a change in mindset. As well as finding ways to keep tenants there for longer to minimise void periods, elements of the building’s envelope and internal fit-out must be chosen with lifetime and life cycle implications in mind. Kitchens and bathrooms, floor and wall finishes, joinery and windows will all come under scrutiny.
This is still a difficult area. Often developers will be constructing a building and then selling it on to an investor within a few years, so the incentive to increase capital cost to reduce operational cost may not be there. However, property experts suggest that investors will be looking quite carefully at whole life costs when they make their investment decisions – whether the purchase is being made at day one or ten years down the line.
Sustainability will be important for build-to-rent homes, motivated by pragmatism rather than the desire to get a green rating such as BREEAM. The impact on tenants’ bills and comfort levels will influence decision on renewable technologies or improved insulation levels alongside the balance between capital investment and operation spending.
An emphasis on whole life costs and maintenance requirements means that the build-to-rent sector is reportedly leading the residential sector in the uptake of BIM (building information management). Used largely in the public sector, due to a Government mandate, BIM makes perfect sense in the PRS: knowing instantly where a window came from, how to get replacement parts or what maintenance regime it needs will save a huge amount of resource.
This emphasis on whole life costs and maintenance requirements isn’t about planned maintenance programmes and replacing kitchens every 25 years – it’s about taking a more holistic look at properties and making decisions that will boost value – which could be measured in financial and social terms – of the portfolio.
This is an approach that Eurocell whole-heartedly endorses. It’s important to look not only at initial cost but at cost in use: what maintenance will be required over a building element’s lifetime and how will that impact on the operational cost for the landlord and comfort of the homeowner.
In this context, energy efficiency is of major importance too. Not just because the environment is of interest: building managers and tenants are deeply focussed on running costs. Elements, such as windows, also must require little, if, any maintenance and they must offer high levels of energy efficiency.
Obviously, in this context, PVC-U window systems are a cost-effective and high-performing systems win for specifiers. PVC-U windows have been given a minimum reference service life (RSL) of 35 years by the BRE, with minimal maintenance during this period. First generation PVC-U windows – now 50 years old – are still performing strongly well beyond this. Glazing units, the most expensive part of a window, regardless of material, will fail long before the frame.
While PVC-U windows aren’t maintenance free – they will still need to be cleaned, and hardware and other items looked after – they are incredibly low maintenance and the cost-in-use burden is significantly less than other materials.
Modus goes into Orbit
A great example of this approach to value engineering lifetime costs and active asset management is Orbit Housing’s Fordham House in Stratford-upon-Avon, which aims to raise the bar for rented accommodation. Designed for key workers in the town, the 82-apartment block will provide enhanced protection against noise, a superior maintenance and repair strategy and additional facilities such as secure internal bike storage rooms.
Much of the budget for these above-and-beyond features has come from the specification of Modus PVC-U windows from Eurocell in place of the aluminium frames originally specified. “We saved a significant amount without compromising on the specification or the design”, says Orbit Commercial Director Adam Cooper. “And from a planner’s point of view, they look identical”.
Deeley Construction began work on the site, which sits on the corner of Birmingham and Clopton Roads, in January 2016 with the demolition of a disused office building. Construction of the foundations began in May that year, with the first tenants due to move into their new homes in September this year. Deeley’s parent company is one of three partners that form the scheme’s developer ABD Developments, and the site itself is owned by benevolent organisation Stratford Town Trust.
Constructed from dense concrete blocks with hollowcore flooring, the three- and four-storey building is clad in a mixture of curtain walling and green wall – sections of planted walls which will be automatically fed and irrigated. The Modus windows, supplied and installed by Unique Window Systems, are tilt-and-turn so that they can be cleaned internally, avoiding the potential hazard and traffic issues of accessing them from the elevations by the two busy roads.
Tenants will be required to keep their windows clean as part of their tenancy agreement. Details about how to operate and clean the windows, together with a function that allows tenants to report and photograph any problems with their apartments, will be available through a smartphone app, developed by Orbit.
With many tenants expected to come from expanding local hospitals, acoustic improvements were high on the menu of potential value-enhancing features. Orbit has beefed up the acoustic barriers between floors with a layer of insulation and screed with suspended ceilings added to the deep hollow concrete slab. It has also added fitted blinds within the reveals of the windows to provide an additional noise cushion for shift workers who need to sleep during the day.
“We did not need to increase the specification for the windows: the existing specification from Eurocell provided the level of acoustic protection that we needed”, says Cooper.
Coming with a 12-year guarantee, the Modus system is available in nine solid and woodgrain-effect colours, all of which are available with white internal finishes to create a light and airy living environment. A further range of more than 40 solid and woodgrain effect finishes is available to order, including colour both sides.
The Modus range achieves a U-value of 1.2 W/m² using 4/20/4mm sealed double-glazed units. This effective thermal performance is due to the 75mm six-chamber profile system used that also enables the range to achieve a U-value of 0.7 by installing triple-glazed units.
This led to Modus becoming one of the very first systems to achieve the BFRC Window Energy Rating (WER) of A++. This is only awarded to windows with an energy index value equal to or greater than +20; and Modus A++ designs include casement, reversible and tilt and turn.
Consisting of 50% post-consumer recycled PVC-U as standard, Modus has a smaller carbon footprint than products made or recycled outside of the UK. Eurocell achieves this by employing dual material extrusion technology (DMET) that layers post-consumer recycled and ‘virgin’ material simultaneously, so the recycled material is concentrated in the central core of the profiles where it cannot be seen once the door or window is installed.
Additional budget gained from savings on the window costs has also gone into upgrading the flooring material. Ceramic wood-effect flooring has replaced lino to provide a longer life and hence lower maintenance costs and down-time for Orbit.
A re-think of the building’s layout produced space for a substantial ‘spares room’ which will house items such as cookers and kitchen units. With all the apartments kitted out identically, this will enable faster repairs and reduce the time required to spruce up homes between tenancies.
Intelligent asset management has proven its worth in the infrastructure sector, and there’s no reason why it shouldn’t help the private rented sector as it builds momentum. To find out why Eurocell can help you manage investor expectations in terms of whole life costs, low maintenance and a value engineered approach to asset management; call the customer services team on 0800 988 7300 or visit www.eurocell.co.uk