Tenant experience and housing-as-a-service
Since the mid-2010s, the real estate sector has seen a surge in commentary around the hotelisation of buildings. A lot of this has centred around the office — with developers and managers thinking up new ways to make their buildings the most attractive for companies (occupiers) wanting to maximise productivity while minimising costs. The movement appears to have two complimentary schools of thought, the first emphasising flexibility (think short-term leases and interchangeable workspaces enabled by cloud computing), and the second emphasising experience (think aesthetics, ergonomics, and amenities). The likes of Leesman have emerged and gained prominence with the aim of quantifying the experience of employees in their workspaces. So too have technologies serving as enablers of the hotelisation-of-the-office movement — with examples of Pi Labs investments in this space including OfficeRnD (flexible workspace software), Greenpass (urban biodiversity); Bright Spaces (virtual viewings and 3D space planning); 720 (indoor air quality); Laiout (floor plan generation and preference matching), Hubble (pay-per-use workspaces); and HqO (workspace experience platform).
But what of the tenant experience in homes?
The private rental market represents a significant portion of housing stock. In the UK, 19 percent of the housing stock is rented privately. In the European Union it is 22 percent and, in the US, 25 percent. Private landlords are often cited as poor maintainers of homes, and this has purportedly worsened in the UK as it has become “more difficult for landlords to profit from bricks and mortar”, leading to cost cutting and maintenance delays. In 2009, 41 percent of the private rental stock in the UK failed to meet the Decent Homes Standard, compared with 29 percent of the owner-occupied stock and 23 percent of the social housing stock. By 2021, there was an improvement, but 23 percent of the private rental stock continued to fail the Decent Homes Standard, compared with 13 percent of owner-occupied stock and 10 percent of social housing stock.
Landlord professionalisation
Our upcoming white paper on fractional ownership sheds light on the proportion of UK private rental homes which are owned by landlords who might be classified as “amateur” or “non-professional”. According to the 2021 English Private Landlord Survey cited in the paper, 20 percent of privately rented dwellings were owned by a landlord with a sole property in their portfolio, with a further 31 percent owned by a landlord with two-to-four properties in their portfolio. 35 percent of landlords purchased their first property with the intention to live in it themselves. Entrepreneurs, tenants, governments, and academics alike have sounded the alarm on the private rental sector and/or amateur landlords. Intermediation has emerged more prominently as a potential solution, with residential property fund managers staking their corporate reputations on the liveability of their homes — a much lower risk for a comparatively anonymous amateur landlord. Professional approaches also aren’t free of criticism, however, with calls in Berlin to nationalise institutional-size residential real estate portfolios and similar sentiment emerging in the UK.
Adapting to shifting consumer demands
In a recent podcast, Dror Poleg gestures to the progressive disruption of conventional office providers created by WeWork — in particular the tipping point where occupiers are no longer interested in business-as-usual. There is mixed commentary on amenity in this sense, with a 2022 analysis of over 200 London office buildings by Fabian Braesemann et al at Oxford finding that “many features that are supposed to drive employee engagement or workplace productivity do not correlate with rent levels”. However, there is certainly something to say about opening the Pandora’s box of service standards across property types. For example, a 2022 Pi Labs case study of Plentific identified tech-enabled improvements to maintenance and repairs it facilitated in UK social housing — linked with an average time to completion of 2.3 days for maintenance jobs (in contrast to upwards of ten days conventionally) and an increase of customer satisfaction from 52 to 70 percent. Plentific’s growth serves as a means of updating the expectations of tenants, where 2.3 days to complete a maintenance job becomes the norm rather than the exception. Where else will this take place in the underserved private rental sector, and how will it affect amateur landlords?
Pi Labs are always on the lookout for cutting edge start-ups disrupting our relationship with the built world. If you’re one of them, we’d love to hear from you: investment@pilabs.vc
