By Neil Young, written May 2020
Warren Buffett’s investment philosophy centres around essential products and services. The foundations of Maslow’s hierarchy of needs align with Warren Buffett’s philosophy. Covid-19 has certainly shown the validity of their conclusions.
The importance of Maslow’s physiological needs – breathing, food, water, shelter, clothing, sleep – during lockdown are the principals of what we are relying on. Yes, many will have more than these basics – companionship, Netflix, Zoom, etc – but many will be relying on the basics.
Therefore, the rental sector – both the buy to let and the institutional investors – play such a key role. The ‘shelter’ we offer is so important to people’s wellbeing. We have the power to help our residents. This is a stressful time for many, let us show how we in the Private Rented Sector (PRS) understands this and will do whatever we can to alleviate some of that stress.
It can be the small things that make the biggest difference. A key one is answering residents’ questions swiftly. Too many sectors, now, have dreadful response times. The travel sector and banks have telephone wait times of over an hour in many cases, that is if you do not get cut off in the meantime.
Even in these testing times, I have found most residents are reasonable. Where requests have come through – whether this is being understanding on rent payment dates or showing flexibility on move in / move out dates – they are usually sensible and proportionate.
It is really encouraging to see the Build to Rent (BtR) sector really focusing on their resident’s welfare. This is through carrying the community spirit within the homes. The BtR sector has over the years differentiated itself by bringing their communities together. In the past, they had events in cafés, amenity areas and in their public realm. Obviously, currently this is not possible. But that does not mean residents cannot be brought together as communities. Events such as balcony bingo, virtual group workouts and Zoom quizzes all help keep community spirits high. As in the wider community, there are many cases of neighbours helping each other. It is heartening to hear.
I have always said that if the residents (consumer) are happy then the financial returns will follow. Returning to my reference to Warren Buffett and Maslow, a home is a basic need. There are so many industries that are currently suffering. Businesses where turnover has literally fallen to zero. The PRS is a resilient sector. Yes, there will be issues over some residents’ ability to pay rent, yes, there will be a short-term issue over voids in some property, however, most residents are paying their rent. We are also likely to see an increase in demand for rental property as lenders reduce availability of mortgages and in times of uncertainty people often prefer to rent than commit to purchasing a home.
So, as a sector we play an important role. We can ease the stress that so many are currently experiencing. We should see this as a way of embracing the importance the PRS has on our residents. Let us use these learnings to improve the way we deal with our customers, not only now, but in the long term.