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A number of polls have been conducted recently, that paint quite a poor picture of the professionalism of the lettings sector, highlighting skills and competence that are lacking in what is now, and continues to be, an increasingly complex business.
Now you should never believe a poll - just look at the recent US Election to see that, however having been around a good while in this business and met many agents and landlords along the way, I can tell you there is more than a grain of truth in these recent poll results.
The two surveys that stood out for me were the Hamilton Fraser Total Landlord Insurance poll that showed 60 per cent of landlords do not intend to use an agent in the next 12 months, due to the pandemic and pressures on costs.
The other report, again from a major landlord insurer, indicated that 20 per cent of the landlords asked, felt that they lack the knowledge and were under prepared to let out property. More disturbingly, 25 per cent did not see this as a problem and were not willing to fill in their knowledge gap or engage expert advice.
The grim conclusion I drew from the message of both reports, is that a significant number of landlords do not see the value of an agent and that it will be this expense that will be the first to be cut when push comes to shove.
The situation is not helped by the fact that a concerning number of agents are not up to the job and, quite frankly, do not provide value for money. Yes, agents themselves have been under pressure, dealing with a combination of having to close the income gap following the Tenant Fees Act and the emergence of online, self-help platforms that promise to replace the service traditionally provided by agents with a landlord DIY solution. But the fact that the sector is not sufficiently regulated is a major contributing factor to the poor performance of a lot of agents. It is a case of the blind leading the blind and unfortunately, a good agent is likely to be cut from a landlord’s budget or passed over for a cheaper and inferior one that will do more harm than good and perpetuate the vicious cycle.
The reality is that these survey snapshots show a sector that is dangerously ignorant of its limitations. To quote former US Defence Secretary, Donald Rumsfeld, “there are things we don't know we don't know.”
Now, the fact you are even reading this blog, indicates that this definition does not fit you, however how can you stop being one of the agents that fall victim to the false economy which is at risk of becoming hardwired into the industry as belts begin to tighten?
The answer is you have to be the best of the best, deliver quality every time and let everyone know about it.
You also need to understand that what landlords want and what landlords need are often not the same, so you will need to help them ask the right questions and for you to do this, you will need to engage with them, as they are not going to walk through your door or click on your website, unless you do something about it.
You therefore must understand what a top class service looks like and then ensure this is what you are known for.
In my view, there are four elements that a landlord should be considering when choosing an agent. Each are important, but equally, the order of priority of the criteria is also important.
The questions, a landlord should therefore ask when choosing an agent are: How competent is my agent in knowing my legal obligations? How compliant is my agent? How much of my personal time will the agent save me? And - How much will it cost me?
Each individual landlord’s needs of course will slightly differ, but I strongly suggest that the least important one of the list above should be the cost. Unfortunately, this is the first barrier as many landlords are price driven. You therefore need to change their mind set and get them to see value in a different way.
Understanding what is important to landlords and that these things could be at risk if they do not protect them, is the first key to selling your service, so ensure that this is the message you continuously promote, rather than your price ticket. It is then for you to demonstrate the value you bring to making sure these interests are looked after. Only after this do you talk turkey and what you will charge.
It should therefore be a primary consideration of a landlord, that if they are not prepared to be personally up to speed with all the particular laws they need, they should seriously consider using an agent. The challenge then is to find an agent that has the specialist knowledge to take on the burden of ensuring that the landlord complies with the law.
This means that you, as an agent, should be demonstrating that you have the level of competence that is needed to fulfil this service. At present there is no requirement for an agent to be accredited and the Government, at least in England, is not yet pressing for regulation, despite commissioning an independent report, which has produced a blueprint on what this should look like. It also does not mean that if you have chosen not to join a trade body who provides accreditation, that you have not acquired the essential knowledge through self-research or experience. However, it is getting harder to keep up with all the new rules and you will need to work hard to persuade landlords that you will cover all the bases. We at the Property Redress Scheme try to assist our members by providing education and information about current and future legislative changes. We also offer members the opportunity of accessing a legal helpline and strongly suggest that all firms get professional indemnity insurance because mistakes happen.
Over the past few years, a number of compulsory protections have come into force to ensure that agents are protecting the financial and legal position of both landlords and tenants. There are also other measures that an agent can put in place to make sure they offer security and reassurance to their clients.
Most notably, agents have to protect their landlords’ money, and where deposits are taken the tenants’ money too. Tenancy deposit protection has been in place for a good while now, however it is only recently that client money protection insurance has become mandatory to ensure that rents collected or repair funds are not at risk of disappearing. Being a member of a redress scheme is also mandatory and can deal with both landlord and tenant complaints. Money laundering regulations now apply to letting agents, albeit for high value rents at the moment, and of course, whilst not enshrined in law, professional indemnity insurance is a must and is also a prerequisite for obtaining the other covers. Don’t forget about data protection - most landlords do, so as an agent you can reassure landlords that they need not worry as you have it covered. Now, whilst every agent should have all these measures in place, make sure you highlight these to landlords to give them reassurance, but also to help make them aware that some agents may be taking a chance in not having these in place and maybe that is why their prices are so low.
Moving on to the issue of time, I have always been impressed with the dedication of good landlords when it comes to the time they invest in their tenants. However, the job of being a professional landlord is extremely challenging and the value of finding a good agent to take on some of this burden is invaluable.
I have also noted that that the vast number of landlords responding to the recent polls were not full time landlords and have become landlords accidently. These landlords literally do not have the time to do everything they need to do.
Your ace card therefore is that by them engaging your services, their burden is reduced, meaning that they can get on with their lives. The best way of doing this, is to outline all the services you will be providing in a comprehensive management agreement. This not only showcases your service, but clearly lays out the expectations of your relationship. One word of warning though, if you promise, you must deliver. If you can’t for the money you charge, you are too cheap!
I have to say that one of the most common areas of complaints I look at is where the expectation of the landlord exceeds what the agent was contracted to do. Clear agreements make the chances of dispute so much less likely. This is particularly important when advertising “fully” managed as this implies that the landlord can “let and forget”, which in reality is not the case. Limitations to your service should always be highlighted and expectations managed.
In a competitive world, where price comparison is the norm, many agents believe that in order to succeed they need to undercut the others. And to be fair, when you are trying to establish a business conceding a little bit of your income to attract landlords makes commercial success. However, if this comes at the cost of failing to know your stuff, protect your client and provide a worthwhile service, then you will soon fall on your face and lose customers and eventually your livelihood.
If, however, you invest in the areas that can convince landlords that you are protecting them legally, financially and provide the service that frees up their time, you will have a quality product that commands a higher price. If all agents went down this path, why would a landlord not want to use an agent?!
Finally, I want to look at how you get your message out to attract more landlords and keep the ones you have.
You cannot be passive and hope that they will come to you. Yes, if you follow my tips above, you will convert practically every enquiry to business, however the challenge is getting those enquiries and leads in the first place. Yes, good marketing and advertising is essential, however it also means being imaginative and reaching out to ensure you are maximising your exposure to potential business.
One way of doing this is to hold networking events, aimed at educating landlords. Give up some of your time to get invited to such events, or if there are none near you, why not run one of your own? Don’t make them salesy but make sure you show your quality and demonstrate why there is more to value than cost.
In this COVID-19 world, webinars, podcasts and blogs are affective ways of reaching out and therefore there is no barrier for you to start doing some of these things now and once we resume a new normal, you can explore the live option, in say a local hotel or meeting place.
You can find out more about how to attract more landlords and what tools and resources you need, by looking at the free Hamilton Fraser Knowledge Centre, particularly the guide to marketing for letting agents, or you may like to attend an in depth and dedicated course on How to Attract New Landlords, presented by Paul Shamplina, the renowned property expert. We also run specialised legal and compliance courses, also featuring Paul in conjunction with Susie Corolla of the Guild of Letting and Management.
As with all good marriages, you need to work hard at them and earn your partner’s respect and loyalty. By following the simple rules above, your chances of success will be greatly enhanced and you will come out of this challenging period, not just surviving but thriving.
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Property Redress Scheme is approved by Government under the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015