Letting Agents – Do you face obstacles or stepping stones?

In our last blog, ‘ Do letting agents face problems or a wake-up call for creativity?’ we concluded that the deluge of changes faced by letting agents requires them to take a step back, reevaluate their business plans and evolve. Sounds straightforward in principle, but how easy is it to put this advice into practice?

One of the key issues which has been identified is the negative perception of our industry, possibly due to the rapid evolution of the sector and a failure on the part of agents to address it. Although agents are bearing the brunt of dealing with an enormous amount of change to regulations and obligations, many have failed to communicate this to their clients. So, why is this a problem?

This is a problem because, although agent’s responsibilities have increased, there remains a perception that agents simply photocopy a few pieces of paper and follow up with a bill. From the point of view of a landlord, particularly one who uses a managed service, they see their fees going up for what they believe to be the same level of service. Wrong!

Did you know there are now 170 pieces of legislation that letting agents have to abide by? But what does this increasingly highly regulated legislative environment mean for agents? The main implication for agents has of course been the major shift when it comes to their liability. Naturally, most agents are concerned about the rapid changes, but some have perhaps failed to keep up with them, seeing them and the increased liability they bring as obstacles to their business. However, as a result of these changes there are new opportunities for agents who are prepared to look for them, as well as alternative ways to increase their margins.  After all, knowledge is key – there has been no better time for you to define your services and manage your and your landlords’ liability to win and retain business.

We spoke to Adam Joseph, CEO of the Happy Tenant Company, to outline just a few ways you might define, refine and upsell your services.

• Right to Rent:  the "right to rent" scheme introduced in England in 2016 requires landlords to check the immigration status of tenants. This task has fallen on the laps of many untrained and unqualified letting/managing agents who were forced to take on the role of immigration agents when this scheme came into force. On 1st March 2019, The High Court ruled that the government’s Right to Rent scheme breaches human rights law and there are now calls to scrap the policy altogether. However, this remains for now a policy that many landlords do not understand or carry out and therefore an opportunity for agents to step in.
   
• Referencing: letting agents will often take up references on behalf of the landlord.  Once the tenant fees ban comes in on 1^st June 2019, new tenants will no longer have to pay for references and credit checks. Landlords will have a choice as to whether to carry this out themselves or pay for a professional to do it.  This will be an opportunity for agents to clearly outline the repercussions of ending up with a bad tenant. Does your landlord know how to interpret the information provided and what to do next?
   
• Inventories: property inventories are no longer just about the condition of a property and preventing disputes; they are now also a check-list of compliance with rental legislation such as:  prescribed information, gas safety, electrical safety; EPC requirements, HMO licensing and the Housing Health & Safety Rating System, to name but a few. We have a wiser, more assertive set of renters than ever before, and they know their rights. Does your landlord?
   
• PropTech: some agents have shied away from embracing the PropTech era without exploring how it could help their business to retain landlords. For example, the Happy Tenant Company uses software which ensures that the renewal dates for all gas safety certificates are registered and diarised. Many landlords don’t realise that if this is not carried out, and they find themselves with a problem tenant, they will not be able to serve a Section 21 notice, not to mention the repercussions should there be a fire.
  
  Why not make a short video and send it to all your landlords and prospective landlords explaining what you do for them? Studies show that video is a 600 per cent more effective marketing tool than print and direct mail combined.
   

Agents, it is your job to change landlords’ perception of what you do and what you can do, to help them to understand THEIR liability and how you can support them in managing it. You need to actively demonstrate your value. Once the tenant fee ban comes into play, landlords will inevitably have to pay for some of the services hitherto paid for by tenants. Opting out of things like referencing and Right to Rent and skimping on inventories could have a detrimental effect not so much on the income of letting agents, but on the protection and liability of landlords.
 

So, do you see the changes coming in as an obstacle or a stepping stone to make your business great? If you want to change how landlords see you, you need to change your own perception of the evolution of the sector first.