For many businesses, finding your voice with investors, consumers and regulators can be a challenge. For property companies and institutional investors who don’t traditionally see themselves as consumer-facing, build to rent also poses additional layers of reputational risk.
Reputational risk has always existed on some level, of course. But the increasing reach of social media, and the speed with which stories can take hold, has changed the landscape for corporate communications.
Companies can no longer stay silent until quarterly results day: reputation management is a 24/7 pursuit.
The keys to success will always be having a high degree of empathy, creating strong relationships with politicians, local communities and the media and being able to speak in plain English – whether to investors, journalists or local traders. Above all though, it will come down to having a good long-term relationship with tenants – or put a better way, customers.
With housing such a politicised sector, where decisions taken by councils can create or destroy huge amounts of value, taking an integrated approach to communicating with all stakeholders is essential. This doesn’t mean creating a good cover story – it means doing the right thing and explaining your reasoning in clear terms to everyone. Recently, developers have come in for extensive criticism on account of social housing provision, pricing, the height of schemes or the fact that many homes are sold off-plan to foreign buyers.
Explaining to people the basic fact that, without foreign purchasers, banks won’t lend money, meaning nothing will get built, that foreign buyers are often necessary to help unlock bank lending and bring schemes forward more quickly can seem daunting so people say nothing. It is about balance, of course. Similarly, while everyone broadly supports the need for new homes, many have an emotional opposition to tall buildings, despite the obvious benefits they can bring in the right locations.
In many instances, developers can be made scapegoats for wider problems beyond their control, such as an historic lack of social housing. The reality of course is that more could be provided if companies accepted lower profits or if the entire system of funding affordable housing was re-written to subsidise individuals rather than the homes they occupy.
However, this is an entirely separately debate. Regardless, developers will always be easy targets for many issues locals face. Sometimes the best defence can be pre-emptive: foreseeing criticism and explaining it ahead of time to address concerns and neutralise criticism.
PRS vs. Build to Rent
Like it or not, renting has a bad reputation. A minority of rogue landlords, who make good television and provide captivating headlines, are what many think of when they consider the sector. The individual make-up of the PRS makes it inevitable that some people will unfortunately have a bad experience. The key thing is making everyone understand how build to rent is different from buy-to-let and why it should not be tarnished with the same singular brush reserved for landlords who line their pockets with renters’ deposits or provide substandard housing.
It’s important to remember that politics is typically focused on the short-term, with councils unlikely to support something that helps the next generation over current voters. Luckily, the ability of build to rent to make a sizeable and very real contribution to new housing supply is a key argument and probably the strongest argument in favour of these types of schemes.
The premium service, bespoke facilities and amenities many will offer are important, but for politicians, housing is largely a numbers a game and it should be the winning argument. Defining and defending build to rent should be easy, but until the sector is mature it is likely to generate all manner of questions from different groups. Explaining some of the genuine viability issues that arise from the provision of affordable housing will be tough, but this is why it is important to consider how others view what you do. To many people, including the planning system currently, private housing is private, whether bought or rented.
To a large extent, build to rent is about turning it from an asset into a service which dwellers hire, just as they do from Zipcar or Netflix.
Avoiding the use of jargon and being transparent will cement the idea that build to rent companies are more professional than the current PRS. Making people appreciate the intentions of institutional or long-term investors will help people appreciate why it isn’t the same as building for sale.
In getting to that point, firms need to be clear on what they stand for and what the benefits are of what they are doing. The default position of local politicians will be towards greater levels of social and affordable housing, particularly in the current housing market which is becoming increasingly unaffordable for many. But things are changing and it is important that politicians don’t automatically turn down new homes due to stringent social housing requirements. They need to find ways to encourage development while delivering a balance of housing at all price points for people on all incomes.
Having an open dialogue on these issues and helping councils explain the offer to their own stakeholders can oil the wheels of acceptance. An increasing array of innovations around housing for discounted market rent, for example, can help balance debates around social homes versus luxury flats. Explaining the economic contribution renters make and the contribution made to businesses should be straightforward.
Above all, it’s important to keep channels of conversation open, even when you don’t need them. All too often, companies ignore local community groups, politicians or journalists because it doesn’t suit them, only to be surprised that they get a raw deal when a crisis erupts. People will always give you a fairer hearing if they know you, trust you and can get hold of you. There will undoubtedly be occasions where it’s best to say nothing, but on the whole, engaging will always reap dividends.