The key to keeping landlords
Losing landlords is currently the biggest threat to a letting agency. Lisa Isaacs has some sound advice for holding on to them and winning new business.
The statistics make for grim reading. Cornerstone Tax found just 1 in 5 landlords say their property investment has been profitable in 2023, while BVA-BDRC says a record number of landlords in England and Wales are planning to sell their rented properties – with 33% preparing to cut the number of buy-to-lets they own.
The lettings backdrop is nothing short of bizarre. Even though tenant registrations and rents are climbing, yields and profit margins are down and being squeezed tighter, with higher mortgage repayments pushing many investments into loss-leading territory. How can agents keep lettings alive and persuade landlords to use professional property management when there’s some serious penny pinching going on?
Upping the intensity
Gill Waller from The Letting Partnership says an intensive level of canvassing for fresh business, more attention paid to existing clients and providing a highly specialised service is what’s required: “With a growing number of landlords contemplating selling their portfolios, agents must now, more than ever, focus on nurturing relationships with existing clients as well as find new landlords to ensure the survival of their business.”
With a growing number of landlords contemplating selling their portfolios, agents must now, more than ever, focus on nurturing relationships with existing clients. Gill Waller The Letting Partnership.
This approach may provide a pain point for those who are used to treating landlord fees as passive income. “Being more hands-on with landlords is not easy when agents are already flat out with managing properties, dealing with tenants, overseeing day-to-day operations and undertaking client accounting. And prospecting is hard work,” says Gill.
She says agents will have to embrace outsourcing more than ever if they are to go on an aggressive landlord charm offensive. Agents using The Letting Partnership can delegate the client accounting side of lettings to free up valuable time and headspace.
It’s increasingly important for letting agents to go beyond the basic tasks of buy-to-let compliance and rent collection.
“Client accounting is absolutely critical to the success of a letting agent’s business, especially in the current climate, but it can also be a challenging and labour-intensive task,” says Gill. “We can take on all aspects of processing rents, deposits and all other client monies, with the option to also include referencing, tenancy agreements and renewals, arrears reports, NRL tax collection and HMRC payments, and even opening client accounts.”
Become risk-reducing experts
Heidi Shackell at The Lettings Hub feels now is the time to put pressure on ‘go it alone’ landlords and those who only use an agent’s let-only or tenant find service. “Many of these landlords don’t enjoy the additional hassle of the extra administration or being on the lowest rung of a tiered service provision: they just need help in seeing the value of using a letting agent or upgrading to a fully managed service.”
Landlords’ risk exposure is growing and expertise on adhering to the law is becoming a specialised skill – that’s what agents need to promote to win business. Heidi Shackell The Lettings Hub.
Agents will need to examine their proposition to see if it’s as valuable, comprehensive and convincing as possible. ‘One-stop-shop’ services that cover the entire lettings journey and that offer a hands-off experience for landlords will be increasingly appealing, especially with legal, regulatory and energy efficiency obligations set to tighten.
“Landlords’ risk exposure is growing and expertise on adhering to the law is becoming a specialised skill – that’s what agents need to promote to win business,” comments Heidi. “Using an agent who looks after every aspect of a buy-to-let can make that leap from self-management to fully managed more attractive for landlords.”
Crucially, managing buy-to-lets doesn’t have to be labour or time intensive for agents – they can promote all of the benefits to landlords without an extra administrative burden. For example, The Lettings Hub’s BOX platform automatically sends out and records tenants’ receipt of key documents, provides legally compliant digitised tenancy agreements, offers protection guarantees, undertakes IDSP-certified Know Your Customer checks and completes tenant referencing with open banking integration.
This level of automation frees time so agents can share their market knowledge, legal know-how and investment advice with landlords, which Heidi believes are an agent’s unique skills, and are key to finding and keeping landlords.
Stuart Anderson at Tenant Shop echoes Heidi’s thoughts about agents needing to add extra value to their proposition in a bid to attract new business and retain landlords, with the best add ons the ones that simplify processes for landlords – and letting agents.
Cost-saving recommendations – such as utility management services – are highly valued, given the challenges currently impacting the industry and general public. Stuart Anderson Tenant Shop.
“It’s increasingly important for letting agents to go beyond the basic tasks of buy-tolet compliance and rent collection. Upgrading services improves satisfaction and increases retention, especially as landlords are looking for agents who can provide added value.” Stuart is also keen to point out that by upgrading technology and integrating platforms, letting agents can offer landlords extra reassurances, such as reducing vacancy periods and minimising cash flow issues.
Add-on services that increase an agent’s proposition can include utility management, comprehensive tenant screening, streamlined maintenance and repair management, financial services, legal and compliance support, effective property marketing, inspections and inventories, rent and legal protection. and bespoke tenant insurances.
“Cost-saving recommendations – especially utility management services – are highly valued, given the challenges currently impacting the industry and general public. For example, letting agents can simplify a complex process, reduce landlord workload and optimise cost management by using our utility management software.”
Become every landlord’s safety net
Appealing to landlords who are panicked by potential fines is something to consider, especially as compliance is complex – and that’s without any new EPC requirements and the forthcoming Renters’ Reform Bill. “The stakes are high and the bar for error is low,” says Goodlord’s compliance expert, Kerry Barber. Is it time to ramp up the fear factor – but not so much that it scares landlords off completely?
The rising regulatory burden is certainly pushing existing landlords out of the market, so I’m sure that prospective landlords are also being deterred. Kerry Barber Goodlord.
“The rising regulatory burden is certainly pushing existing landlords out of the market, so I’m sure that prospective landlords are also being deterred,” adds Kerry. “Getting to grips with the legislation is hard but that’s where having a letting agent who can guide landlords through the process is invaluable when convincing landlords to pay for a professional service.”
The issue is some letting agents themselves have a hard time keeping up with the reported 150+ items of legislation and Kerry circles back to the role third-party partnerships will play in the immediate future. “Keeping up with and interpreting legislation can be a challenge even for letting agencies. Each team member will need to understand the requirements, meaning training and internal controls need to be robust.”
If compliance isn’t understood and implemented accurately in house, the damage can be irrevocable. As well as hefty fines, there is the impact on the brand. Agents will potentially lose incumbent landlords, be shunned by new business and see a big impact on their profitability.
Ensuring managed lets are compliant can be two-fold. As well as human diligence, software including Goodlord’s can create a tenancy so watertight that even the most nervous of landlords will feel at ease. “As well as our software, which ensures compliance requirements are met for every tenancy administered through the system, Goodlord has a team of people fully trained in lettings legislation, a process that keeps up to date with legislative changes and a system that has been designed by legal experts.”
Offer reassuringly reliable renters If it’s the thought of rent arrears or badly-behaved tenants discouraging landlords, the very best referencing should be used to appease. “There is a real mix of applicants applying for rental properties,” says Diligent Services’ Graham Sandley, “although, sadly, there is an increase in the percentage of attempts being made to obtain rental property using false or fraudulent means.”
The latter is especially off putting but offering landlords the most reliable and accurate referencing may reduce risk to such a level that landlords are prepared to keep faith with buy-to-let or even start an investment journey.
Of course, landlords can carry out their own referencing, but a letting agent can offer a superior service, be extra thorough, know the tricks of the trade and be willing to undertake face-to-face meetings with tenants. In the case of Diligent, its referencing service is only available via letting agents, which adds an extra reason to go pro.
Graham says his referencing USPs are strong enough to entice landlords – and provide a bonus for agents too: “With Diligent, defaults are extremely low, which results in our rent guarantee typically being less than 50% of normal market prices. Agents are able to mark up the cost of the rent guarantee to landlords and use the rent guarantee as a profit area, with the price to the landlord still being typically less than the normal rates.”
Keep on holding on
The outlook isn’t getting any better and with the Renters’ Reform Bill supported largely by both sides of the House, agents need to double-down on making life as easy as possible for their landlords and offering a safe haven for new new ones – because despite the gloom, rest assured, there will always be new landlords to find – and keep!
