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Beat austerity with positive promotion.
Recently, I attended an agent conference where economists from RICS and Lloyds Banking Group made a rather daunting presentation on the state of the British economy; there were no surprises but it did get me thinking...
The proposed austerity measures could create one million unemployed; potentially 600,000 public sector jobs and 700,000 private sectors, linked to public sector, are at risk. So I started to think about the effect on the ground. Cities and towns with large public sector workforces in universities, hospitals, government and council departments are the most threatened. What would happen if rental demand dropped by 10 per cent and some of your tenants became housing benefit tenants; or you started to get more defaults on rents because tenants had lost their jobs?
So, how to plan for such a dip?
We started by looking at our own letting agency and what we could do to turn a risk into an opportunity. Landlords’ perceptions will change, they will worry about the effect on their investment. I would look to answer those worries with PR and promotion of protective services.
How are we going to implement these services and maintain them? Being in the fortunate position of owning both an agency and lettings software company, it was clear that clever integration and administration was a software need.
So, we are introducing a spectrum of services for the letting agency that go beyond a standard management service and bolt-on rent guarantee insurance. We are also going to allow landlords to upgrade and change their management service mid-tenancy, to take advantage of some new ideas, all of which can be administered and managed by the software.
There are a range of options already available, some provided by third-parties, others which are the result of innovative thinking by agents on the ground.
FastTrak’s housing benefit guarantee service, where housing benefit tenants are pre-approved and then insured, effectively asks the tenant to insure themselves. It’s a great scheme for filling empty properties, and if an existing tenant has to move on to housing benefit, they could join FastTrak’s scheme so they can remain in the property.
HomeLet is introducing a new ‘Absolute’ rent guarantee service which is a monthly insurance, not a classic annual policy. Landlords benefit by not paying for a policy upfront, assisting cashflow; the premium can be simply added to an increased management fee.
Some larger agents are providing guaranteed rent payment services, (which should not be confused with insurance), and charging a premium on management fees. Peter Alan in South Wales is to launch a ‘PayDay’ service where landlords get the rent the day it is due, irrespective of whether the tenant has paid on time. In cases where rent remains uncollected, Peter Alan will process a claim on the outstanding amount from its own insurance policy, not the landlord’s.
Adding these types of protective options to your existing management services will provide a wider choice, to suit more landlords. More importantly for a letting business though, these supplementary, protective services crucially protect your own management fee income.
Whilst recent reports state that tenant demand is high, there is still a risk that the rental market will feel the effects of unemployment, so the provision of additional services and the right letting software to deliver them is crucial.
LetMC software can manage all these different services and more via a simple tick box, pre-populating the necessary paperwork and enabling landlords and tenants to opt-in. Furthermore, it automatically transfers the money from a company ‘Rent Guaranteed’ account to a landlords account. In addition, LetMC tenant chase tools enables mass chasing of tenants by letter, text and email; all recorded on landlord management reports.
Protecting your business and your landlords’ income is more crucial than ever; but there are many tools to manage risk, so we should all be making the most of them.