The last 12 months have heralded significant change across the property market and indeed we could argue across all markets in one form or another. But one change has been in the pipeline since before COVID and before work-from-home adaptation came into play and that is a generational one.
The most populous generation in today’s workplace are Millennials (those born between 1981 and 1996) with Generation Z (approximately born between 1997 and 2012/15) coming up fast behind them. They are the first digitally native inhabitants of the United Kingdom and indeed the world at large.
But what significance does this hold for the property market? Well, it goes without question that people will always need a roof over their head, and that means that the residential buy and let markets will forever be a perpetual engine in motion.
What is shifting however are the expectations and lifestyle adjustments of renters, many of whom are choosing to rent for longer, albeit not necessarily in one place, and are starting to see it as a flexible lifestyle choice, rather than the more traditional steppingstone to home ownership.
Are we becoming a nation of renters?
In the UK, the Office for National Statistics (ONS) last estimated in 2017 that nearly 4.5 million households were in the private rented sector, up from 2.8 million in 2007 – an increase of 1.7 million households and equating to approximately 20% of the UK population. That growth does not appear to be abating anytime soon and one such analysis predicts that tenants in the private rented sector could make up to 50.7% of the housing market by 2039.
Now it is still far too early to say whether this shift will come to pass. The government of the day is keen on more people becoming owner-occupiers, with a mandate to turn Generation Rent into Generation Buy – a strategy most recently positioned through initiatives such as the government-backed 95% mortgage scheme. Nonetheless, it is certainly the case that more people are choosing to rent for longer.
One reasonable assessment of this is that high house prices and stagnant wage growth are to blame, the former having increased by an average of 10% in May over the previous year. Or simply that high demand for property available to buy is simply not being fulfilled by otherwise inadequate supply.
I do not wish to overly repeat ad nauseum that we need to build more houses – we are all quite aware of that. But the reality of the matter and the market is that more people are renting than ever before, and more people are choosing to rent as a choice rather than a necessity. Which means that how people rent and what they expect from their rental experience is also shifting.
The way people rent is changing
At the forefront of the increasing demand for rental properties are the younger generations, Millennials and Generation Z, who are staying in rented accommodation for longer than previous generations and are entering the market with different expectations and with those, demands, for instant, real-time information on the rental market and the rooms and properties they choose to reside in.
These young renters are the smartphone generation – digitally native and adept with technology from a very early age. Millennials and Generation Z increasingly want flexibility in their living and workstations. They are also more invested in dynamic renting, a reality made possible by the rising number of jobs which can be performed remotely – why rent for two years when “wherever I lay my laptop (that’s my home)”.
Renting will continue despite the government pushing the buy agenda. For agents and landlords looking to bring on board these renters as their customers, it is becoming increasingly important to look at what renters are looking for and how to offer them a higher standard, both in the homes they choose to rent and in the customer journey it takes to get them there.
On the latter note, our industry must be more digitally strategic about how we approach our marketing towards Millennials and Generation Z renters. Both demographics primarily use online and social channels to in their search for homes and are becoming increasingly service-expectant in what they are looking for. My colleague at Reapit, Tara Sparrow, recently set out some excellent tips on how agents can target Generation Z renters – a demographic that was estimated to reach 40% of the global population by 2020 – but they apply almost entirely in kind to Millennials as well.
Developing better services for tenants
When it comes to attracting younger renters, agents should certainly consider adapting their strategies from traditional to technological, but that is just the start. Tenants are now more invested than ever in a seamless online customer experience. And from beginning of tenancy to end, there is a growing expectation among renters for quality service and continual services to enhance their tenant experience.
That expectation is quickly becoming a more deliverable reality. As we now live in a digital world, tenants can hope to benefit from closer connectivity to their agency, with access to digital services like concierge services.
There are many PropTech companies now working on delivering digital services both for agents and tenants to make the whole process much more efficient and seamless than ever before.
Some of these PropTechs include solutions such as Movinghub – which provides a range of services in the area of pre-move removal and cleaning services, and a wide range of insurance options for tenants. Or Fixflo, which conveniently allows tenants to easily register repairs and maintenance online which can then go directly to the property manager or agency responsible with no additional hassle.
The future of the tenant experience is one in which we can provide more efficient and better services to tenants, and I will add that for agents this is about to become easier than ever, because the two services I mentioned above are now Apps that can be instantly installed in Reapit’s AppMarket. If you have not had a chance to see what it is all about, I sincerely hope you give it a look because now more than ever, being future proof is a necessity.
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