For many people across the country, their ability to stay in their homes is in jeopardy. And this is not about mortgages. Rents have risen sharply this year, and many are being forced to move as a result. Others will be forced to leave due to the collateral damage of homeowners being unable to afford a higher mortgage rate and selling.
In the rental market, there are dozens of unknowns and uncertainties for tenants. The idea of “brand loyalty” is an unknown concept.
In such a fragmented industry, building loyalty is secondary to filling a room. But no-fault evictions, standards and liability, safety and security issues, all exacerbated by the pandemic, are central to the loss of faith in 1.5 million homeowners across the UK. In 2021, only 63% of private renters said they were satisfied with their renting experience, far less than the 79% of social renters and 98% of landlords who said they were satisfied.
Curating a brand in the rental sector seems like overkill, but established and beloved retail names have identified a gap to play in their reputation experience by providing high-quality service and subsequently retaining loyal customers. The John Lewis Association, founded on the idea of industrial democracy, is a powerful example, and there are others as well. Lloyds, the high street resistance, has pledged to introduce 50,000 new homes to the rental market, while Sainsbury’s, Tesco and IKEA offer mixed tenures with development partners.
Build to Rent is not a new concept in the UK. Professionally managed rental housing has been growing for more than a decade, with 225,352 homes completed, under construction or planned as of the first quarter of this year. Far from the opacity of the traditional private rental sector, it presents a tempting offer for tenants outside of the landlord lottery and an attractive horizontal move for brands with established properties and in-depth knowledge of their customer base.
In the melting pot of retail, where the battle for footfall is constantly shifting, resilient brands must foster lasting credibility with customers to survive. Applying these principles to a disjointed rental market invites structural change, and in more ways than one, especially when renters expect so little from their landlords.
The immediate effect of trusted brands entering the rental industry helps empower renters. Once residents are considered customers and their preferences are part of the rental business model, the goal will shift from simply providing accommodation to outperforming the competition.
Looking ahead, it would not be unrealistic to envision a rental market dominated by brands offering a different range of services, styles and prices. Instead of being kicked out of properties every time their owners decide to sell them, a tenant could move through a network of residences, renting from a company that trades on loyalty, rather than the prevailing demand for rental housing only.
The benefits could go further. With consumer brands understanding of consumer needs and buying habits, we are likely to see demand for a new interaction between where we live and shop. In this regard, the UK is behind the US and Asia, where ground floor commercial space is used in urban areas for the sustainable integration of commercial and rental housing.
For decades, the private rental market has been against tenants. As retail brands enter the space, they have the ability to change the stagnant status quo of the past.