Home » Features » Too much on? Let’s outsource!
Products & Services

Too much on? Let’s outsource!

Do you want income from property lettings but not the hassle of dealing with the admin and compliance burden? Outsourcing provides the perfect solution, says Richard Reed.

Richard Reed

Link to Oursourcing feature

If Covid has thrown one thing into sharp relief, it’s the importance for agents not to put all their eggs in one basket – and that means getting income from rentals.

Lettings is now clearly the ‘go to’ sector that can keep agents afloat during hard times on the sales front, while pure lettings agencies have never been more confident about their future. But lettings don’t come without their own set of difficulties. Compliance – dealing with the ever-increasing burden of government regulation – can be a massive headache, as, too, is dealing with ongoing property maintenance issues.

There is a simple solution that will lift the entire admin burden from the shoulders of hard-pressed negotiators and free them up to focus on expanding the business.

Thankfully there is a simple solution at hand – one that will lift the entire admin burden from the shoulders of hard-pressed negotiators and free them up to focus on expanding the business.

Outsourcing promises an end to all the hassle, with many outsourcing firms offering to take over the whole process once a new tenant has been found.

The Negotiator talked to two different providers to see how their product offerings differ – together with two franchise-type models that are actively recruiting experienced letting agents.

ARPM

Link to Oursourcing featureTim McGlashan, business development director of ARPM, says outsourcing can save agents a huge amount of time.

“We don’t do it by halves, we do the whole hog,” he says. “We liaise with tenants and landlords, we do all the booking and arranging of maintenance work, chase rent arrears, deal with the tenancy application process, referencing, and so on.”

We can jump in and do the whole of the tenancy admin – referencing, deposit lodgement, inventory booking, prior-torrent checks, day-to-day maintenance management… Tim McGlashan, ARPM.

Agents can also pick services in ‘silos’ if they prefer, with ARPM just doing the basic rent collection or property administration, but there is no requirement for agents to be involved if they don’t want to be.

Smaller lettings firms tend to go for the full package, larger firms often retain functions such as rent collection.

“Some agents want to stay involved – they don’t want to lose control, and we don’t want them to – we are only here to alleviate the time-intensive nature of the back-office lettings process to free them up to focus on areas which are more profitable for their business,” says McGlashan

“A lot of agents we’ve spoken to recently just want to get more time back, and are fed up with dealing with the day to day admin.”

Many of the company’s clients are small to medium-sized lettings agencies who can’t afford to employ a dedicated property manager – staff have to be a Jack or Jill of all trades.

“The benefit of outsourcing is that you have a property manager who is solely focused on doing property management,” explains McGlashan.

Link to Oursourcing feature

“Essentially, if an agent wanted to use our services and wanted to do the least amount possible, they would just have to advertise the property online, conduct a viewing, agree percentages with the landlord and agree the rent with the tenant. Then we can jump in and do the whole of the tenancy admin – referencing, deposit lodgement, inventory booking, prior-to-rent checks, day-to-day maintenance management, all the compliance issues, collecting and processing rent, paying contractors, the whole caboodle.”

Many of the company’s clients are small to medium-sized lettings agencies who can’t afford to employ a dedicated property manager – staff have to be a Jack or Jill of all trades.

So how much does ARPM charge for taking on this onerous burden? McGlashan says it varies from agent to agent, adding, “We’re not here to take the lion’s share, we are here to make this work; we offer bespoke pricing for any agent that contacts us.

“We have to make it financially affordable but when you compare outsourcing with employing someone, there’s an awful lot of hidden costs that you don’t always factor in – recruitment, training, development, holiday pay, sick pay, NI contribution, pension, company car, software licences, the time of people covering them when they go on holiday and so on.

“With outsourcing it is a flat fee per property per month, and that’s it, regardless of size of property.”

ARPM offers a white-label service, responding to tenancy issues as if they were part of their client’s business – which in many ways, they are. “Tenants and landlords shouldn’t even know that we are involved,” says McGlashan.

The firm has been growing rapidly thanks to ever more burdensome compliance regulations, and, of course, Covid.

“The positive thing [about Covid] is that it’s forced agents and agency owners to think about how they can do things better; how do they do things more efficiently, how do they maximise what the end-clients want – the landlords and the tenants.”

Lets Help

Link to Oursourcing featureTricia Brannagan is founder and director of Lets Help, one of the smaller outsourcers – but Brannagan has no wish to dilute her excellent customer service by growing too big.

Lets Help is also a white label offering that can take on the whole of the admin burden from agents.

“We deal with everything,” she says. “We release the agent to just go ahead and do what they are good at – usually agents are really good negotiators but they are rubbish at admin.

We deal with everything. They can go out, do what they love doing, let it, pass it to us and then we do absolutely everything for them. All calls are diverted to us. Tricia Brannagan, Lets Help.

“They can go out, do what they love doing, let it, pass it to us and then we do absolutely everything for them. All calls are diverted to us. If they are on a call to a potential new client – new landlord, new tenant – who is going to make them money, they don’t want to pick up a call and find it’s a tenant complaining about something.

“All the agent has to do is sign the landlord up, take on the property, market it and arrange the deal.

“We collect all the tenants’ monies, pay any contractors, organise any works, deal with any issues or complaints and deal with any arrears up to month two. The agent doesn’t get involved at all, unless they want to.”

Lets Help also offers a half-way house, just dealing with back-office functions. When it comes to pricing, there is a simple sliding scale for the full service: £35 per property per month for one to 50 rentals, £32.50 up to 100, £30 over 100, and £27.50 for over 200.

Lets Help also can also carry out the up-front service – drawing up the tenancy agreement, sorting references and booking utilities for a £150 one-off fee.

“If they had 100 properties that’s £3,000 per month. That’s not bad considering if you had 100 properties under management you would need a property manager and an accounts clerk, and you would also perhaps have to have someone dealing with complaints,” Brannagan points out.

She says she is getting more and more inquiries as a result of Covid. “At the moment with this pandemic situation a lot of agents can’t afford to pay qualified property managers. Property management is specialised and becoming more and more involved – you need to know what you’re doing – it’s not a matter of just pulling in someone part-time who’s done a bit of admin.”

SDL Property Partners

SDL is a block-management franchise offering, providing back-office support for both individuals and companies that either already deal with block management or want to start up in the sector.

Agents can operate under the SDL brand, co-brand or keep their own brand using a white-label service.

Full training is provided, with ongoing support and additional training when needed. SDL can also help new agents set up their own company. Once the business is up and running, SDL takes care of the back office, including the client-account function.

SDL will deal with compliance and provide ongoing support and training, while franchisees focus on managing the properties, setting service charge budgets, overseeing repairs, and dealing with maintenance and admin.

“In recent years, more property businesses have become aware of the additional revenue block management adds to their traditional sales and Link to Oursourcing featurelettings income,” says Chris Summers, Head of Franchising at the SDL Group.

“But it’s not as straightforward as setting up that side of the business and away you go. Property businesses can quickly become swamped by paperwork, banking, client accounts and all the back-office jobs that take up their time and stop them focusing on the relationships with their residents and customers.

Property businesses can quickly become swamped by paperwork, banking, client accounts and all the back-office jobs that stop them focusing on their residents and customer. Chris Summers, SDL Group.

“By outsourcing to us, they plug into our back-office support. We then look after compliance and all those important but time-consuming jobs. We also provide training, set-up support, branding and marketing – so we essentially remove all barriers that stop our partners from growing their business.”

SDL franchisees retain 70 per cent of the block-management fee.

Apropos

Apropos is a new brand owned by Edinburgh-based DJ Alexander, and operates a similar model to SDL, though it is not technically a franchise but rather a Purplebricks-style model. The UK is split into 150 territories; there are already 31 business partners signed up with another five waiting to go through the training course.

“We provide the back end – landlord compliance and certification, informing electricity suppliers of the new tenant, informing the council – Link to Oursourcing featurethe only thing the person on the ground does is the front end,” says CEO David Alexander. This involves doing the valuation, viewings, check-ins/outs and inspections.

“They run their own business and have their own territory. They don’t have to worry about compliance, rent collection and certification, we do everything for them.”

We provide the back end – landlord compliance and certification, informing electricity suppliers – the only thing the person on the ground does is the front end. Davis Alexander, Apropos.

There is an initial fee of £5,000 for new partners: “It gives them some skin in the game,” explains Alexander. “We have a very rigorous procedure. We interview them and they interview us – it’s got to be right for them and it’s got to be right for us.”

Commission is split on a 70-30 basis – partners get 70 per cent of the fees if they find a new client; 30% if the lead comes via SDL head office, which takes care of all the marketing.

“We think the model of having a high street premises is dead and buried,” says Alexander. “People don’t come to your office, even more so with Covid-19. People are renting doing virtual viewings, and we’ve managed to rent quite a number of units where we have physically never met the person – they have viewed it online, they’ve applied online, they’ve signed the document online.”

arpm.co.uk
www.letshelp.uk.com
sdlpropertymanagement.co.uk
apropos.app

October 13, 2020

What's your opinion?

Please note: This is a site for professional discussion. Comments will carry your full name and company.

This site uses Akismet to reduce spam. Learn how your comment data is processed.