What Do Tenants Want? A Developer’s Guide

When it comes to constructing the homes of the future, it is vital that developers understand precisely what tenants and buyers want from their homes to best meet growing demand. As a leading expert across the UK property market, Centrick are shining the spotlight on three key areas where developers could meet growing demand:

• By improving energy efficiency across the PRS sector
• By constructing BTR accommodation in city cores, with a particular focus on single family housing
• By building more student accommodation in areas with dense student populations

Tenants Want Energy Efficiency

It is evident that developers must prioritize sustainability to meet environmental standards and regulations – that much is clear through the number of Green Building Regulations across the UK. But do tenants and home buyers genuinely value green initiatives?

In short, the answer is yes – tenants and buyers alike seek energy efficient features. In fact, the Love Where You Live research reveals that energy efficiency is the single top priority for renters across both PRS and BTR schemes, surpassing features like garden space, parking, and pet friendliness. Furthermore, over 36% of respondents stated that they would be willing to pay a premium for enhanced energy efficiency, and 30% would pay extra for access to EV charging points. 

Supporting this, a 2024 NatWest study found that 75% of renters want their landlords to improve the energy efficiency of their properties soon, indicating a strong demand for greener homes. The prominence of energy efficiency in the Love Where You Live research is not surprising given the high level of environmental awareness among British homebuyers and renters. According to the same NatWest study, half of the respondents are dissatisfied with the government’s green initiatives, 79% of Brits are more eco-conscious than a decade ago, and a Financial Times investigation shows that the UK is more aligned with the ‘green agenda’ compared to countries like the USA, Germany, and France.

Whether driven by the cost-saving benefits of energy-efficient technologies or the environmental advantages of sustainable construction, it is clear that future developments must emphasize environmental considerations in order to be competitive in the market, drive up value and keep buyers and tenants alike happy.

Tenants Want BTR

Build-to-rent (BTR) properties are quickly reshaping the UK rental market. In fact, 2023 was the best year for BTR transactions, which hit £4.5 billion, and 2024 is expected to be even better year with a pipeline of £6 billion worth of investment. This quickly increasing level of investment is a testament to the desirability of BTR for both tenants and developers alike. For tenants, the appeal of BTR lies in offering well-situated housing with top-notch amenities and a strong emphasis on community living. It’s no wonder that 46% of those surveyed in the Love Where You Live research stated that their next move would be to a BTR development as opposed to buying a property or moving to a PRS unit. 

What’s more, it seems like BTR isn’t just set to be what tenants want, but what the market needs. The Q1 2024 English Housing Supply Update by Savills reveals that while BTR completions are rising, annual brick deliveries have fallen by 25% year on year, and construction output in the broader housebuilding sector was 19% below 2019 levels. In short, the BTR sector is improving at a rate that the rest of the market can’t keep up with.

However, while BTR developments are popular for their sense of community and extensive amenities, developers need to be aware that not all locations or types of properties are suitable for BTR. For example, small-scale offices might be better suited for conversion into private rented sector (PRS) units, which typically require fewer amenities such as gyms, on-site restaurants, and ample parking—features increasingly expected by BTR tenants. Additionally, convenience is key for many BTR residents, who prefer developments located in city centers or town hubs. This is why the pipeline for BTR developments is largely focused on large cities, with Birmingham, Manchester and Leeds respectively having the largest number of BTR units in the pipeline outside of London. Therefore, prospective BTR developers should carefully consider the ’15-minute city’ model when planning their projects.

But what form of BTR property is the most popular with tenants? Well of course that depends on the market and location but we expect Single Family Housing units to be the most lucrative for developers, with projections indicating that it will account for 18% of the build-to-rent market by 2032. This trend is largely driven by the increasing challenges of homeownership, as changes to Help to Buy schemes, high interest rates, and variable mortgage costs are making it more difficult for families to purchase homes. Unlike flats and apartments, which may no longer meet the needs of modern families, single-family homes provide essential amenities like parking and gardens, making them a more appealing option for renting families that developers should be aware of.

Tenants Want Student Housing

With over 2.2 million full-time students in the UK and a severe housing shortage, there is a compelling case for developers to focus on constructing purpose-built student accommodation (PBSA). Research from the Higher Education Policy Institute indicates a current shortage of over 207,000 student housing beds, with projections suggesting this could increase to 450,000 by 2025. This growing demand presents a lucrative opportunity for developers, especially in cities like London, Birmingham, and Manchester, which are home to multiple higher education institutions.

However, unlike other demographics that are most attracted to commutability, energy efficiency and amenities, the National Student Survey unveiled that what tenants want most in their student accommodation is affordability. In fact, 64% of students have stated that  that they find it hard to pay their rent and 40% have considered dropping out of higher education altogether due to their rental costs. Ensuring that your PBSA development is as profitable as possible with high construction costs and low affordability from prospective tenants, it is important to have a land consultancy expert like Centrick on-hand to identify opportunities in this chronically undersupplied sector.

Your Partner In Property Development

Are you a property developer searching for your perfect partner in property? With almost two decades of experience helping developers source, construct and list units across the UK, Centrick are on-hand to guide you towards property development success. In fact, that’s why we’ve created the Land: How To Buy It, How To Sell It, How To Develop It guide to provide a comprehensive, end-to-end look into how to improve your development, acquisition and sales processes. By evaluating the current needs of the market, existing property regulations and gathering exclusive insights into market trends, we have created the ultimate guide to developing property – you can grab your free download below!