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Navigating inflation: lessons for leasehold from BTR

At Navana we are working with teams to understand what evolving buyer priorities mean for a development’s design, specification and amenity mix.

Rising inflation is already taking its toll on the residential industry.  The latest S&P/CIPS Construction PMI data shows that weakening consumer demand in June saw UK housebuilding activity fall for the first time since May 2020.

Understanding how the cost of living crisis will impact buyers’ behaviour will be key to the sector’s future success, and developers and their supply chain partners will need to adapt sales strategies accordingly.

Of course, to some extent, this will be determined by factors outside the industry’s control – not least the changing mortgage market.  But there are other areas where we can have a more direct impact.

At Navana we are working with teams to understand what evolving buyer priorities mean for a development’s design, specification and amenity mix.  In-depth customer mapping is essential to getting this right and this is where leasehold can take its cue from the build to rent (BTR) sector.

Understanding the customer

The important thing to know in the context of inflation is what consumers really perceive as valuable.  Amenity choice in particular can have significant implications for monthly service charge costs, which could be the difference between a new home being affordable for a purchaser.

But what do buyers really want?  Is it high-quality fixtures and fittings, or would they rather spend on a place with electric vehicle charging infrastructure?  Will they actually use an in-development gym or will this simply push up their monthly fees with no benefit?

Detailed consumer research is needed to illuminate this complex picture.  All development teams map their target demographic, but BTR has traditionally been far more advanced in its approach to really getting under the skin of buyers and shaping schemes around them.

Take our gym example again – if some buyers show preference for exercise facilities but not all, then developers could opt for a compromise approach, negotiating a discount scheme with a local operator or giving residents the flexibility to opt out of different amenities.

As budgets are squeezed and buyers scrutinise service costs, for-sale developers must learn from BTR’s laser-like focus on customer modelling and operational cost planning.  It could be the key to making their schemes stand out from the crowd and being more competitive – and ultimately to driving continued sales growth.

– Kelly Bream is COO at Navana Property Group.