Housed: The Shared Living Podcast

PBSA vs HMOs is the gap getting wider? Is this the year of the re-booker? Why Pricing & Incentives Involves Fighting with Investors, The Sector need to get more Political and why Ops teams are Heroes

• Season 5 • Episode 7

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The hosts are dissecting a lot in this week's episode - here's a breakdown of what they discussed:

- PBSA vs HMOs is the gap going to get wider?
- Are we losing the affordable end of the market?
- Is the timing of the marketing to students going to shift?
- Do we need to get more political as a shared living sector?
- Is this the year of the rebooker?
- Why is price setting such a fight?

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Dan Smith is Founder of RESI Consultancy and Co-Founder of Verbaflo.AI Good Management.

Sarah Canning and Deenie Lee are Directors and Co-Founders of The Property Marketing Strategists - Elevating Marketing in Property.

Thank you to our season four sponsors:
MyStudentHalls - Find your ideal student accommodation across the UK.
Utopi - The smart building platform helping real estate owners protect the value of their assets.
Washstation - Leading provider of laundry solutions for Communal and Campus living throughout the UK and Ireland.

SPEAKER_03:

This is the money, and it is a mood in season five. And it is the mood I see one. I'm Sarah McCumming from the Property Marketing Strategy Test. And I'm Jamie Lee from the Property Marketing Strategy list. Let's just hear the one from my text.

SPEAKER_01:

Season five of House, sponsored by MyStudentHalls.com. List your properties commission free and reach thousands of students searching for their university home.

SPEAKER_03:

Dan and the team from MyStudent Halls have been supporters of House since the beginning, and we are incredibly grateful that they're here once again as headline sponsors of season five. To make the most of this PBSA season, make sure MyStudent Halls is in your budget for the leasing season and get your properties advertised. Also, a huge thank you to Wash Station and Utopia for coming back and sponsoring House once again. More from them later. So it felt like last week was like a bit of a Renters' Rights Act week. Obviously, we had the announcement that May the 1st would be the big bang date for most of the elements of the act. We obviously had Amanda from Howard Kennedy on the podcast last week talking through all of the implications for landlords and operators. And also I was invited to a student housing roundtable by Nikita Asher from Trowers and Hamlin's, which was also about the Renters' Rights Act. And actually, it was a really, really great conversation about the wider implications from the sector. It was a really great group of people, it was very lively. And I just thought I'd take a moment to kind of discuss the key points that, and obviously, Deanny and Dan, you weren't there. So it'd be good to hear your views as well. So one of the things that we discussed was will we see even more of a split between domestic and international students as PBSA arguably becomes easier to navigate compared to HMOs. And generally speaking, international students want and need longer contracts anyway. Deany, what's your thoughts on that?

SPEAKER_02:

Yes, that probably makes total sense. And I guess where I'm thinking is that the Renters Right Act hasn't really been well communicated yet in the UK. So I think it's difficult for domestic students to even know what's going on. And I think for international students that's going to be even harder. We don't do a great job of educating people anyway about what it is to move into this, move to this country, what needs to happen. I guess my only thought process is that whilst for international students, for education agents, it makes sense and it's simple to just carry on as before, go into PBSA, it's really simple. You get this fixed-term contract, everything stays the same. But over time, is that going to continue to shift and change? As actually it becomes more commonplace, the changes that have happened with the Renters' Rights Act, that actually it might still be the way of the world that actually first year international students go into PBSA understand they get that degree of flexibility from other HMOs, from other rental options, and potentially move across. And I guess it is just that that view, I guess, that kind of like it's as as things change and become complex, we've got to move with the market and keep an eye on that and keep moving that. So I guess, yes, I think that it still makes sense for normal service to resume in terms of all those people working in that sector. But as it becomes more commonplace and as people kind of find out that actually there is a degree of flexibility elsewhere, is that kind of going to be when we see the shift two, three, four years down the line?

SPEAKER_04:

Yeah, I I I agree. My thoughts are a bit all over the place on what will happen. And I think you've got that well-trodden path of first-year university halls, second year HMO, or potentially PBSA, if you're a domestic undergrad. And I think most domestic undergrads in particular would choose that path. They would go into university halls, then they will end up in an HMO. And it's PBSA's job to persuade them otherwise, and that's with affordability and amenities and security and all those things. And I think international students are more aware that that has got to be a key focus. They're moving countries, they have to think about security. They want to make sure that they are in a place where they can make friends and it's much easier to book. And that's where PBSA absolutely comes into its own for international students. But the Renters Rights Act coming in is definitely going to throw a spanner in the works and possibly change the booking flow and the decision making and preferences of some of these international students, in particular, domestic students. I don't see there being a drastic change unless PBSA really has to flex and offer much lower tenancy lengths because they have to compete with you know HMO and BTR and co-living, etc. But I think that from an international student perspective, it will take a little bit of time for them to realise that, oh, actually, if I go into an HMO, I could just give notice in April and be gone by June. And then I don't have to pay right the way through the year, but then obviously you have to lug all your stuff back, or you have to put it into storage or whatever. So I think it's it's going to be really interesting to see. I can't I can't call it as to what I think is going to happen with the trend at the moment because we are terrible at communicating the renters' rights bill to anyone and everyone. So I I think that it's been incredibly badly done, badly handled from an industry perspective. Also, then from a uh from a public-facing PR perspective, no one seems to know what the Renters' Rights Act really is, what are going to be the benefits, and what is that going to mean for PBSA or HMO or students. And clearly, from all the research that we've seen and and that you've seen, students don't have a clue either. No one knows what this means for them. And so it will just have to play out in practice, and that's why I cannot wait for May to see exactly what happens. So I'm not seeing a massive difference in the rents at the moment. I don't think landlords uh in HMOs are really looking at driving rents massively. It'd be interesting to have a chat with um likes of Richard Ward at Stu Rents, who've got a lot of HMO data there as well, just to see what those rents are doing. But but yeah, it come May, it will be really interesting to see quite how many students actually hand their notice in and then move out before the summer, because that is officially their option now if they choose to go into student HMO. Don't know what your thoughts were, Sarah.

SPEAKER_03:

Yeah, I can I can see there being a knock and effect, but I think there's lots of other things at play. So one of the things that was brought up is students actually, a lot of them do stay over the summer. There's this assumption that if they could, there would be a mass exodus over the summer. But actually, it was discussed that a lot actually stay in HMOs over the summer. They might be working, there's festivals, there's exploring, there's graduations, but the whole house has to agree to give notice or not agree to give notice. And I think that could be quite a tricky part that landlords and letting agents might start seeing as well. And I mean, we've always said this this act puts an enormous amount of onus on the tenant, which might be okay for a mature, experienced renter, but for students, this could be really, really difficult. Um, we were having a bit of a fun WhatsApp uh conversation on Friday evening because I told you both that I'd spent about an hour explaining the Renters Rights Act to my partner, and he is the parent of a student at university who is going into her second year, who is starting to look at this. And he's like, I need to understand this because how she's not going to understand her tenancy agreement. I need to understand this. So she needs to understand that the people that she's thinking about moving in with next September, who she's only just met, really, she's got to predict what's going to happen the following summer at the end of her second year, because she needs to know that they're all on the same page and that they're all going to want to leave that property in the summer, or they're all going to want to stay in the summer. But the landlord won't want them to necessarily stay in the summer. It could work out as long as they agree to leave by the end of August, basically. But it's really, really complicated. And we are, you know, we me and my partner have grown up in the UK. We've all rented, we kind of understand how things go, but I think the new Renters' Rights Act almost eliminates every parent from the situation because it's completely new. So they can't refer to any of their experiences of renting because it's just completely different. And I think, like you were both saying about the education piece of it, it's got to extend to the parent as well as the tenant as well. I mean, it will it will normalize as these things do, because come 2027, this is just the norm, this is just how people rent, and people will get used to it. But I think the next 12 to 18 months is going to be quite a transition period.

SPEAKER_04:

Yeah, I totally agree. I think we just have to get better. Operators, I think, in PBSA have got a real opportunity here to talk about how much, you know, how safe their properties are, how you can have yeah, guaranteed tenancy lengths, and that that can be a positive. Like that's not me just trying to put spin on something. Like you, you there is definitely a positive to this for international students to to say to them, look, you don't have to move out. Like you can keep your stuff there, no problem at all. And and I think it is that we we do have to get better at educating students, whether PBSA or HMO, on the fact that there are benefits to both sectors. So, you know, you have great flexibility and you now have an opportunity to give notice on your rent if that's what you want to do. And and I think that is a really positive point for HMOs. But is anyone really communicating what that means to international students in particular or even domestic students? No. I I've seen pretty much nothing coming out of any HMO or student accommodation operators that really explains it particularly well, to be honest.

SPEAKER_03:

I mean, they they have time and they only knew literally on Friday, um, last Friday that May the 1st was going to be the day. Um, as Amanda discussed on the podcast last week, there are loads of things that people can be doing in the background. So it might well be that they are doing all those things in the background because there's a lot of paperwork, there's a lot of training, systems that all need updating. So it might well be that that's happening in the background anyway. So, and let and let's and let's hope so. But yeah, communication must be a big kind of agenda point, really. I just wanted to talk about something else that we discussed that I actually put forward, is whilst we all appreciate that the professionalisation of the rental sector is welcomed, there's a risk that the lowest price properties will be taken out of the market and won't be replaced. And that might be because they don't meet minimum home standards. It might be that all of this legislation is too much for landlords, it might be that they're experiencing a financial risk. There might be a whole load of reasons, but they may leave the market. Positively, it seems like actually institutional landlords are snapping those properties up. So it doesn't look like we're gonna experience a shortage of properties, which is fantastic, but they're likely to push the rents up, they're likely to increase the standard of the homes, which is great. But with that and with institutionally backed finance, they're going to want to push those those rents as well. So is that going to take a whole layer of affordability out of the market and will that push even more students into commuting?

SPEAKER_04:

Again, I'm I'm absolutely fascinated to see what happens here because we've been calling it for a while that there needs to be more institutional investment into the student HMO scene, as it were. Now you've got the likes of student Cribbs and Homey and several others who are courting that institutional capital, actually raising it and then deploying it. And they're buying up, you know, hundreds of properties, dozens of properties at a time in some key locations. And they are, I I know from talking firsthand to both of those guys that they are very seriously looking at how to make sure that they can keep those properties, or some of them at least, in the affordable sector. So there is a focus on making sure that we still have affordable stock, but there is a definite need to professionalize the student HMO sector. Not all of them. There are some really good operators out there, there are some really good responsive landlords and responsible landlords. But I think the opportunity is the sort of smaller mum and pop type landlords to, you know, who they won't be thinking about student satisfaction necessarily. They'll be thinking, is my rent paid on time? And they'll be really looking at this as an investment to drive performance for their pension. And don't get me wrong, that's what every operator, an investor wants to do in some kind of real estate transaction anyway. But I think with the institutional capital coming in, you have much longer-term approach here. You know, from the conversations that I've had, it's not just a sort of you know, one year, two year, three-year flip. It's let's just hold these for the long term. We see the potential in these. And so I would hope that in the course of the professionalization of the investment into student HMOs and the institutionalization of that, that we don't see these big price hikes that you would expect. There may be some sustainability work that would need to be done. I would expect that, at which point, yes, there will need to be some kind of uh return on that. So therefore, some of the prices will will rise. But I don't think we'll see this huge increase in student HMO prices as that as the institutional investment flows in. I really hope that the sort of smaller landlords don't put their prices up. And from like I said, from what we've seen so far, haven't seen dramatic increases at all. But I think making up for the drop in tenancy lengths is going to be one of the biggest things that impacts the student HMO sector. And and I can't see another way around it than institutional investment coming in and being able to withstand some of those drops in tenancy lengths, or mum and pop landlords selling up or potentially raising their prices, at which point, yeah, you know, demand starts to come into supply demand, imbalance starts to come into play, and maybe those prices do rise. So, yeah, it's a very mixed picture. We just won't know again until later in the year. It's the data is going to be all over the place as well. So we probably won't have a full picture, but it would be yeah, it'd be great again to have a chat with the with the guys at Homey and uh and student cribs to see where they're up to in particular.

SPEAKER_02:

Yeah, I I agree. I think there's a real unknown picture going on, and I think there is a massive risk that, well, we're already saying that we're in an affordability crisis, we don't have the right homes for the right types of students already, and this is a massive change, which you know there's lots of different things at play which is going to impact pricing, but there is a risk that we we lose that lower level, and I guess this comes down to understanding the data. We're already seeing data come through that's showing more and more students are commuting, and I think this is where we always talk about the collaboration as a sector, we need to come together and we need to talk about this because I don't think universities want a world whereby we just have a bunch of commuting domestic students and international students living locally near the university, and that is a risk of potentially happening if we lose that lower end of accommodation. And I guess if you're in the student accommodation market trying to home students, yes, there are affluent students that can afford very high rents, and yes, we should have a product for those that suits their needs and suits their requirements, but there's students across that whole spectrum of mid-range and lower range, and I think if you're providing student housing, we need to try and provide something for those people that want to go and be a student because otherwise, going away to university becomes very much only for those of a certain ability to invest in that accommodation, and it'll have a knock-on effect, and then it becomes a thing that actually domestic students don't go off to university, they might commute for a bit and then they might not go and do it at all. So I think we need to look at the short-term picture and the long-term picture and look at the data and look at the impacts of those data and be in a position to adjust our products and pricing and proposition accordingly for those changes. Because I still maintain if you're in student accommodation, you need students who need and want to go and live away from university. If you don't have that, you don't have a business model.

SPEAKER_03:

And that really leads on um to one of the other parts of the Renters' Rights Act, which we don't know the detail yet, because I think this is one of those that's going to be implemented at a later stage. But we know that HMOs won't be able to be advertised until six months before the tenancy start date, which will be March. We don't yet know, and we did have a bit of a debate about this at the round table, whether they can advertise it, but they can't enter into a contract. But anyway, there's going to be this split again. And what I what I wanted to know is if there is a lack of accommodation being advertised from November to March, and only PBSAs can advertise their properties from November to March, will students just think, oh, there's no accommodation available? And particularly as we've just been discussing, there's no affordable accommodation available, I won't be able to book anywhere, I'm going to have to look to commuting and living at home. So it will suddenly there might be a massive influx in March of loads more properties being advertised. But if students have already booked PBSA but didn't really want to and couldn't really afford it, are they then going to cancel in March when they see loads of other properties hitting the market? Or will their decision be made by that point that they're like, gosh, like this city's got a real lack of accommodation. Uh there's nowhere for me to live, I can't stay, I'm going to commute. That's quite dramatic. But what do you both think about that?

SPEAKER_04:

That is really, really interesting. Now I yeah, because the HMO market is so front-loaded. You you get places that have sold out of their HMO stock by December, typically. And so if that stock's not advertised, I'm just thinking about marketplaces as well, the the likes of Unihomes and what that would do there. Like that will be really interesting to see how everybody copes with how how everyone copes with that. Uh now that will come in for next year, but it should, it should stand PBSA in good stead. Because again, this won't be communicated. So students will be like, oh, hang on a minute, we've got no HMO stock. And they'll probably think we don't have any HMO stock left. At which point they'll be like, right, well, we have a decision to make. Is it PBSA? Are we forced into something that we can't afford? Or, you know, are we are we whether it's affordability is an issue or not, are we just going to choose PBSA? Or as you said, Sarah, are we going to see more commuters? We're already seeing a lot more commuters than we ever have, I primarily because of affordability. So I I do think that that is going to that is going to be a huge issue across the board. And it's going to lead to a lot of overworked sales teams letting agents, and it's going to especially during, you know, from from that from March onwards. And it's going to lead to PBSA needing to get their pricing out ASAP. You check in, you get your pricing out for next year, you start your rebooking campaign. Because you're going to want to try and get ahead wherever you possibly can. And you know, this will cut we'll come on to talk about this later with the with the rebookers, uh, rebooker section. But it is really important that that in PBSA in particular that we front load those bookings as much as we possibly can because that that demand later on in the season is faltering. And so I think that's where you know we've we've it is going to be completely upended by the renters' rights bill here. And PBSA needs to be ready for that, I think. And so does student HMO. But quite what that looks like for them, I I don't know. We should probably get some people on, especially from the from the HMO sector, to talk about that. Now I've I've got a panel coming up uh at Property Week that that I'm chairing or moderating, and that is involving student HMO, BTR, PBSA, co-living, and university halls about the fight for students. So this is going to be a really interesting one. It's going to be hopefully reasonably controversial as a uh as a panel session, as I like them to be. But that that point you raised there, Sarah, is going to be so interesting to talk through and to see what we're having Tom Tom Ferber on from Homey, it'll be interesting to see what he's got to say on that.

SPEAKER_02:

Yeah, I'm just thinking about this, and it actually came to I was thinking about it when we came back from class actually, because when I did my site tour in Portugal, they still have a process of that they open in February for returning students, and then all bookings open in March. And I know why we don't do that in the UK. Um, we probably used to do it in the UK and we've moved to earlier and earlier and earlier. Um and I know it's not what universities want to have that early thing, but it kind of made so much sense in that actually, it doesn't mean you can't market, it doesn't mean you can't communicate that you're going to have rooms available, it doesn't mean you can't build up waiting lists, it doesn't mean you can't take expression of interest, but it just means you've got more time to see where your occupancy was at the end of last year, to plan for your pricing and proposition for the following year, and to build up an awareness of actually, I know that I've got some demand here because I've spoken to people and I've got these waiting lists, and actually, when I open in February, I can make some assumptions of how many readbookers I'm going to get and then open up to new students. That's not going to happen here. I I'm realistic enough to know that, but it kind of feels a much more sensible process. But I guess the Renters Rights Act doesn't stop people going to an estate agent and saying, I'm looking for a home in this this time to say I will have a house, but I can't advertise it yet, but I can take your name.

SPEAKER_04:

So is this now going to lead to those queues round the block in March? Are we now going to see that you know we've got r landlords with with queues right round the block? Like we're like we've seen them in Durham, we've seen them in Bristol and various other locations when there was a short shortage in Bristol. And I just I just can't see that this is going to be a positive. I genuinely think there will be next not this year, the following year, 2027, there will be queues around the blocks of the student HMO landlords in March when the prices and the and the houses are launched. Because right now there isn't a well, it's the first of October, so or it's the first of November that you that you can launch. So I just think it's going to be so I it's again I d I I want to see it because I think it'll be really interesting. But this is it's like that steamroller coming down the road in Austin Powers and trying to run over the security guard. He sees it coming miles off, but doesn't move out the way. That's exactly what it feels like here for student HMO letting lading agents and landlords that this is going to be absolute carnage come March 2027. So how do we abate that? I I just don't know.

SPEAKER_02:

But can they not put an option on a property to say, yeah, I want first refusal on that property? Is that not because that feels to me the natural way for a state agents to work it is to say, here's the properties, you can put an option on it, and I'll come back to you for first refusal, in which case it does mitigate that queuing because you've already expressed interest in certain properties of certain types. So I don't as you say, we don't know. And sometimes these things don't always go the way that you expect them to, today.

SPEAKER_03:

Yeah, I think, I mean, I think it was great that we had this conversation um on the podcast and also at the round table, um, and we urge kind of the sector to keep those conversations going because, like Deanny said, it's about collaboration. We're all going through the same things and the same challenges. So if everybody talks and everybody kind of you know learns from each other, the the whole point of the Renters Rights Act is to make it a more fair renting environment for tenants. So we've got to make sure that that still carries on. Um that is the point of it. And this can't turn into greed and competitiveness, really. That that kind of shouldn't be the ethos of all of this. So, therefore, by sharing and learning from each other, that's kind of the only way forward. But yeah, let's let's continue talking about it. And you know, we look forward to your session at Property Week, Dan. That'll be really, really interesting. And let's have a break. Let's hear from Utopia.

SPEAKER_02:

This episode is brought to you by Utopia, the smart building platform that helps real estate owners protect the value of their assets.

SPEAKER_04:

From ESG compliance to energy efficiency and resident engagement, utopia turns real-time data into action, making buildings better for people, planet, and profit.

SPEAKER_03:

If you're in asset management or operations and care about performance, utopia is your essential partner. Find out more at utopia.co.uk. That's utopi.co.uk. Thank you so much to the team there for all your support you give us and ensuring this podcast can be reduced every week with your sponsorship. We really enjoy working with you. Thanks so much. Next, Dan, you were invited to the BPF dinner. What can you tell us about that?

SPEAKER_04:

Uh so yes, I was. I was invited for full transparency. I was invited by Bay Downing and Jessica Harbin from Aboria. Uh, I've never been before because I haven't been part of the uh British Property Federation, BPF. And it was at the Guild Hall in London. There were it was a lot of, I mean it's black tie, so you couldn't see the blue suits, but you could tell there were a lot of blue suits there. Uh a few agents there, Hugh Forrest there, he was on our table, had a really good chat with him, and it was it was really good. It's the annual, it was the annual dinner, uh, effectively. Uh Ed Balls was the key speaker talking about you know what the hell's going to happen with the government and what's going on. And you know, he he was I think he's quite glad not to be in government right now, to be completely honest. But I I think I'll be doing a lot more of those kind of things, not the black tie, I'd rather not do that, but the the British Property Federation events. Yeah, BPF is now going to be merging with AREF, which is the Association of Real Estate Funds, and the IPF, which is the Investment Property Forum, to create RE UK, so Real Estate UK. This is the kind of thing I think that needed to happen because we've talked on house a lot about is there any you know credible representation for the PBSA sector or BTR or co-living in government? And from what I've seen, no, there hasn't been. But what I did is, you know, I I made sure to go out and I joined the Association for Rental Living and the British Property Federation just so that I can see where the influence is and how we can make sure that our voice is heard. Now, both of those bodies are very credible in their own right, they do really great things. I think that there is a real focus within the within RE UK as it is now, um formerly BPF, as to making the our voices heard within government. Uh, you know, I've I I know they have a PBSA committee, BTR committee, etc. And it's going to be really interesting to see as as we go through the course of this year in particular, and that merger takes place, and the new committee starts to kick in, um, which has got the likes of you know Matt Merrick, Joe Lister, Ollie Humphreys as well from IQ, and Paul Watson uh from now Student Living. There's various, you know, key industry people that are on that uh committee who are hopefully going to be driving it, but will that actually have will that will they feel like they're being listened to? Will the government actually take any action, heed any of the advice? You would hope that Steve Reed, the Minister for Housing, will do that because he's basically said, fire me if I don't deliver one and a half million homes. Well, at the moment that, you know, that looks quite likely that that will happen anyway, and he may end up unseated in the next election. But either way, I I think that we all need to make sure that we back the right horses when it comes to influence in government. And and by influence, it's making sure that our voices are heard, as I've said. So whether it's the uh ARL, the Association for Rental Living, or whether it is the uh new RE UK body, I think it's definitely worth joining in some way, shape, or form. I think it's it's it's time that we as an industry started to speak up for ourselves. There's a lot of uh moaning in the background from from what I've seen previously. And I think that uh it's definitely time to it's time for me personally, obviously, but um I think for all of us as a sector to really know that the government are asking for help in terms of you know renters' rights bill and planning and development and getting things moving, build baby build. Whether they're actually listening or not, I don't know. I've tried to do it myself, I've tried to do lobbying myself. It is nigh on impossible. You're banging your head against a brick wall. Uh I did manage to get some meetings in and you know, maybe set the scene, gave some context, but was was there influence there in any decisions that were made? Clearly not, from from some of those decisions that were made. So I think it's get yeah, it it's it's time for us to get a little bit more political, I think, as a sector, especially as the sector matures and the problems with university funding in particular become very apparent as they have done, and the knock-on effect that has on student numbers, etc. But also then some of the other uh you know geopolitical factors that that we have and and the focus on immigration, for example. I think it's there's a real opportunity for some credible thought leadership. And yeah, it was clear from being at that dinner, but I I also know that you know the ARL held a really good conference as well, um, that was very well attended. And I I think there's there's an opportunity there too. So both of those bodies are very credible. Um, I did also manage to catch up with Nikita Asher, um, which was lovely. I you know, wandered into the room in my tucks, and uh yeah, I I actually I saw I saw Ollie Humphreys from IQ, their COO. I saw a couple of other investors here and there. It was primarily investors, obviously, as I said, Q Forrest from JL, of course, Bay Downing and the Aboria team and Issi and Jessica Harbin. And incidentally, Jessica won the sort of lifetime membership to the to REUK because she's been as president, pioneering and spearheading the uh the merger. And so that was really, really great to see. Um she's done some incredible work there, clearly. Um but just wandering around the room and Nikita came up and grabbed me. She was like, Dan, how are you? Um and obviously we then just chatted non-stop, which was lovely. So yeah, glad that you um got some time with her as well at the Rentis Rights Bill round table as well, Sarah. Uh, but overall, yeah, good event, well worth going to. I'm really interested to see what happens with REUK and whether PBSA is drowned out in amongst a massive body, or whether or not we actually really have the committee to drive meaningful change and influence and get our voices heard.

SPEAKER_03:

I mean, I think I've written down do we need to get more political as a soundbite for today's episode? But we know from talking with the CLAS Foundation that that's exactly what they're doing, and they've made great progress, but on mainland Europe as part of the EU. And I know that a lot of those conversations that they're having are equally valid in the UK, but it feels like we need more. We're different to mainland Europe, we're being treated differently. So, you know, the emergence of more bodies and like more lobbying, as you said, you know, just has has to be welcomed. It has to be, we have to be vocal, we have to be visible, we have to be, you know, loud. And, you know, the more people that do that, the better, as far as I'm concerned. We're just going to go to one of our other sponsors as well. Let's hear from Wash Station.

SPEAKER_00:

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SPEAKER_03:

And thank you, Wash Station, for your amazing support of the podcast. And, you know, congratulations on what an amazingly successful season that you've had in the sector as well. Right, let's talk about rebooking in PBSA. Um, it feels like everybody has opened up bookings to their existing tenants as a minimum right now. And for anyone who doesn't know, the sector takes great comfort financially in getting a certain amount of residents to rebook for another year as early as possible, really. The general target is usually around 20% of all residents who can rebook. And most of that is front-ended between November and December as well. So, Dan, I know that you've been very vocal on this. What are you hearing about the launch so far?

SPEAKER_04:

Yeah, so a lot of the bigger operators have launched full rates, even the third parties, which is interesting. They normally, the investors quite often drag their heels, it's much more difficult to coordinate. The owner operators can just launch and do whatever the hell they want, which is which is nice. So I I did a post on LinkedIn last week just saying I think this is the year of the rebooker. I've said that a couple of times, and I say it for good reason because we really need to front load that booking season as much as we possibly can, because it's very, very clear that that market isn't there later on. We used to see this big peak in clearing where you could guarantee that you could just fill the rest of your rooms if you weren't quite full in pretty much every location. So that's this that was the sort of build it and they will come mentality. Now you can't do that. And last year was very much a focus of you can have occupancy or revenue, but you can't have both. I also think that that's probably the same this year. However, people have been more realistic about their pricing. We're seeing a mut a real recalibration, which is great. I think everyone's learned from last year that they do not want£1,000 cashbacks in August or September, or three and a half thousand, which is you know what we saw. And in fact, it was£5,100. That was the biggest one that we saw, which is horrifying. But you know, what do you do if your asset's not full? You you try and fill it by any means. Now, I I think rebookers should be the number one target for any operator. I I just think it's the best marketing channel that you've got. It's having having a sticky asset, which basically means that you know students want to book there, then they want to stay there. That's absolutely key. That's on you guys to do it, right? You have to make sure that that's that's your focus and that's your community building skills and your teams primarily that are that are driving that. But you also need to make sure that you're incentivising them. So my advice to clients in launching their their rebooking has been let's incentivize them. And I know that I've talked about cancelling the cashbacks, and I I stand by that, but that's for later in the year. I think we don't want any cashbacks after the rebooker campaigns have have closed effectively. And the rebooker campaigns don't really close now. Like that's you know, they hedge their bets and they take more time than usual. You can't guarantee that by the 31st of December or January you're going to have closed your rebooking campaigns. But I think that if we are going to offer cashbacks, it needs to be to rebookers. I've got various different clients with different amounts of cashbacks. We've got price freezes, there are you know good recalibrated prices. And I think really importantly, we're starting to see operators offer a best price guarantee to rebookers in particular, but also to those early bookers. With a best price guarantee, you will not have to pay more than someone pays later down the line if you're booking early. And that's absolutely key. You need to reassure those students who book early that if they actually hold, you know, waited and booked in July, that they would get£1,000 cash back more than they already had, or they'd get a lower price, or whatever it might be. It's not going to be great news for revenue, to be completely honest. That's not going to be easy to manage. But if you set your pricing right, you should be incentivizing those people to rebook with you or book early, and then the ones later on, you know, that's that's on them.

SPEAKER_02:

It's a totally different approach and metric, though, in terms of cash back at the end of the year and offering what I call a loyalty reward to your rebookers. Ultimately, it's totally different in the sense that the cost of acquisition of your rebooker is minimal. Whereas if you're throwing out£1,000 cash incentives at the end of the year, you're not only losing that money, but you're losing all the marketing costs because they're a lot harder to find because you've got to find them in the first place. So I've never really understood why, as a sector, there's been so many restrictions on supporting loyalty of your current residents. Yes, we need to make sure we manage that to ensure you've got that rolling number of returning residents that you can. But for me, it's it's about planning, and I still don't see enough of this planning going on in the sector that says actually, I understand my market, I understand my customers, I understand that actually I can probably maximize my rebookers to 20-30%. Um, I know I'm going to get X amount of PG students, so they're only going to be in for a year. And therefore, looking at how the market's performing, I know I can fill my gap with um other returning students. Um, and some of those returning students might already be those in the city. So actually, there is a different target and a different play to those at Rodin City than those that are starting as new students the following year. And it just it it it just makes total sense to from a brand perspective, a marketing perspective, to really nurture and support and get those that want to stay with you to continue to stay with you.

SPEAKER_03:

Yeah, I th I've written down here that it's all about your data, that's the the health warning here. And we do lots of marketing audits, and sometimes the data isn't as accurate or as thorough as you would like it to be, and you can't plan that that way. So you do need to manage your rebookers effectively though, because you will run out in one to two years. So you need to refill the pot with as many first years as possible coming into the market. And if they're mainly going to be going into university accommodation, which might be specific to your city, then you need to focus on your second years, who at least will have two years with you potentially. If you, you know, and we do see this cycle sometimes that actually your your pool runs out after a while because you've been so successful uh filling your building with returning students, but they're gonna leave next year. So you constantly need to be kind of balancing out actually how many rebookers you have in your in your building. But what you have to remember is if you're not incentivizing loyalty enough, they're being absolutely bombarded by other operators and market and marketplaces. Um, you know, so if you're too quiet, if you're too late, if you don't make your incentives strong enough, if you don't um make them tailored to the people in your building, then you've got to remember that there will be another operator probably offering between 250 and 500 pound cash back for an early booking incentive as well. So it's you know completely on you to get in early um to to capture those rebookers um and you know keep them loyal. I think the other thing that that we hear a lot from sales and marketing teams, and it it it it I'm referring back to a point that Deanny just made, it feels like a fight. Trying to get investors and asset managers to agree to loyalty incentives for rebookers feels like a fight. It's really hard work, it's exhausting, and I don't know why operating operator teams, marketing teams, sales teams have to argue and fight for this point. It's obvious. And like Deanny said, the cost of acquisition is so much lower. Maybe we can explore that sometime.

SPEAKER_04:

I know. I look, I do understand it because an investor will think, well, they're gonna live with us anyway, aren't they? So do we need to pay them? Do we need to give them£500 cash back? Is that you know what we should be doing, or should we be freezing their rents? And obviously it's all money. It it is it is that cost per acquisition for rebookers. It I mean, it can be significant, but it but it depends. I would much rather have that community that does retain the right people and and builds that real sense of community, because that's that's what it does. Like if you have a fresh cohort every single year, like most university halls do, it's a very different asset to run than PBSA, where it's a real mix of first years to postgrads, to to you know, whatever else. And I think that that's where investors will be thinking, right, we actually don't need to incentivize anyone to rebook because if we build enough of a community well enough, then we'll be, you know, we don't need to give them money off their rents, we don't need to freeze their rents, we don't need to give them cashbacks or whatever it might be. And that is what they'll be thinking. It'll be like, okay, well, we need to push the rents enough that we have not sold out every single room by May, that we're literally coming into September, just before check-in weekend, we sell that final room, and that we've eked out every single bit of occupancy and bit of revenue that we possibly can. And that's that's the challenge that we've got in a market like last year, where occupancy is not guaranteed, it's just not that easy, and there are only so many levers you can pull. So I think it's going to be much of the same this year. I I I think the undergraduate numbers look good from what we've seen from UCAS so far, but it doesn't change the affordability crunch that we've seen. It doesn't change the fact that not that many students can afford PBSA. And I think that's where we have to get better at frontloading that sales season and frontloading the bookings into November, December, January, so that you can be reassured that later on you will hit that 100% and you'll understand whether your prices are right or not, and whether you launched the right rents, and you can adjust accordingly because if you do front load, it does give you an opportunity to drive your rents through dynamic pricing later on in the season. You are then able to push those rents up. There is nowhere in any industry where that price should go down later on. Like that, I just think that it's that is a complete sign that you've got your pricing or your strategy wrong. If you're having to drop pricing later on, you're having to do those big incentives, then you've not worked hard enough on your rebookers or your pricing was wrong. It's really that simple. So by having a lot of rebookers, you can then dynamically price later on to drive your prices slightly if that's what you want, to eke out that little bit of extra revenue. So yeah, I still think even though the cost per acquisition can take a bit of a hit with rebooker discounts, I think that it's worth over-indexing on rebookers personally.

SPEAKER_02:

But it's also about having a real realistic plan and monitoring that plan. So actually you can adjust much earlier. And that it doesn't happen enough, in my view.

SPEAKER_03:

No, exactly. If you have that comfort by December, you can adjust the prices in January. That's absolutely fine. But it's getting that comfort early that you've got it right with your rebookers. Just another note about it though is this is about operations rebookers. People aren't going to want to live in your building if you're providing an inadequate service, if your maintenance is slow, if your customer service isn't great. You know, the rebooking side of things is much, much less about marketing. Yes, they can help with communication, um, but actually the crux of it comes to your operational staff and they need to be trained, they need to be prepared, they need to know the students in the building, they need to have the systems and the processes to manage the rebookers. Um, but this is really, really about the people in your building, working in your building, living in your building. Um, and they're not going to stay with you if they're not happy living there. And if they are rebooking with you, that's that's an amazing vote of confidence in your product and your staff and your team as well. And, you know, rebooking should be complete kudos to your operations teams, and they should get all of the plaudits and bonuses and incentives for achieving that because it's all about them. And I just think that should be recognised and rewarded much more.

SPEAKER_04:

Yes, you're so right, Sarah. Please incentivize your teams. Those are operators that are doing the best that I have heard of, are really heavily incentivizing their teams on site, and that may be some kind of, you know, whether it be pooled bonuses, whether it be individual bonuses for GMs or just any kind of site teams, look after them. It's absolutely pivotal that they feel incentivized to actively sell because that is what they're doing at the end of the day by providing a brilliant service, they're actively selling to those students and those residents, but also they are doing the tours. They're you know putting the graft in on your CRM if you still have one or whatever it might be to really drive those bookings. So look after your teams, incentivize your staff. Can't express that you know clearly enough.

SPEAKER_03:

And we just wanted to give you a quick update on what we discussed a couple of weeks ago about setting up an events bursary to ensure we encourage a more diverse group of people to attend events. We have indeed contacted a few events organisers and have had a good response so far about giving us some tickets that we can then pass on to people that would really value the experience. So we will be opening up applications very soon. However, through having these conversations, we've also discovered that there are some organisers that have great initiatives already, but you might not know about them, particularly for young people to attend. So we will make sure that when we get details of these, we will be sharing them across our social media channels as well. Another point is on the last episode of this series, in a few weeks' time will be a special queue in a episode at the end of every season. So if you have a question that you would make a media mic, we need a question that we can find.