Letting agents are being advised to think seriously about how they can recoup costs to help compensate for the introduction of the letting fees ban, which will make it illegal to charge tenants for things like references or inventories.
The Tenant Fees Bill, which will also introduce limits on deposits, as well as a series of new fines for breaking the rules, is likely to be law by the spring of next year, with the government estimating a loss of £240 million a year in administration fees for letting agents and landlords in England and Wales.
“Landlords and agents cannot ignore this change which is inevitably coming so must put in place appropriate measures to deal with any loss of income,” said David Alexander, managing director of D J Alexander.
Thankfully, despite the fact that some traditional income streams are being squeezed, there are a range of other sources that enable agents to earn additional revenue streams in the form of referral fees, from solicitors and surveyors to TV, broadband and utilities.
Think outside the box
Some of the highest earning agents are those that think outside the box, and outside the property transaction, by building relationships with other parties, as part of an enhanced approach to the service they provide their clients, with a view to selling related products to new movers.
“In a challenging market, it’s more important than ever for agents to be able to enhance their service,” said Luke Burton, sales and marketing director of Rent4sure.
Insurance, for instance, is a great example of a complementary product which can be cross-sold after the initial transaction, with standard tenant and landlord insurance policies ranging from around £80 to £250 per annum, depending on the value of the contents being insured, while tenant’s liability cover additionally costs from around £60.
Utilities and optional services like TV and broadband also provide a good source of additional revenue streams for agents, particularly those operating in the letting sector where people move home more frequently, by referring new movers to providers in exchange for a commission.
“Many tenants want and appreciate having a complete package arranged and set up before they move in, and this also provides a sustainable source of revenue for letting agents,” added Burton, who pointed out that his firm offers agents a service that can provide tenants with broadband, media and utility deals, “tailored to the AST”.
“All aspects are managed by Rent4sure, leaving letting agents to focus on other areas of their business whilst offering a complete package to a home mover.”
Zoopla Property Group, which owns uSwitch, is among those that regularly develop – and acquire – products that directly benefit agents by allowing them to source the best gas, electricity, broadband, TV, and phone deals in the market and earn fees whilst saving money for their clients.
The firm’s supplier panel tool MoveIt has already generated more than £1 million worth of referrals for agents since it was acquired by the portal giant just over two years ago.
“Moving is a key trigger point for customers to review their current services with the primary objective of saving money,” said Kelly Tolan at Dixons Carphone, which provides a switching service for broadband, TV and energy that can benefit both consumers and agents alike.
“Customers that switch their broadband, TV and energy services with us on average save £500,” she continued. “Not only can we save your customers money but we also provide a switching service that not only provides great comparison advice at point of sale but also provides an after sales support team to help with any bumps in the road.”
In addition to helping your clients at the point of their move, Tolan points out that her firm, like many service providers, can also become “a revenue generating opportunity for your business”.
She added: “By providing us with leads you in turn can earn generous commissions for those customers that go onto purchase.
“In return we will provide you with up to date reporting on the leads, conversion and commission payments as well as managing your customers through their switching journey.”
Building client relationships
Reaping the financial benefit from various revenue opportunities, including earning referral fees, often hinges largely on strong client relationships.
Virgin Media, which works with more than 1,000 sales and letting agents nationally, from small independent agents to much larger regional and national accounts, encourages agents offering Virgin fibre broadband, TV and home phone packages, to refer prospective customers as soon as possible.
To help speed up the process, the company aims to ensure that it is “simple and easy” for agents that partner with Virgin Media Home Connect by offering on-going support and training for negotiators on its personalised online referral portal.
The aim of the scheme from a tenant or homebuyer’s perspective is to ensure they can get their Virgin Media services installed as close to their move in date as possible, according to Mike Gardner at Virgin Media.
He explained: “The key to this is having a conversation with the customer as early in the moving process as possible, ideally three weeks prior to their move in date, so we can contact the customer, help them to select a package that suits their requirements and arrange an install in good time.
“This approach is best for the customer as they can be comfortable knowing that they don’t need to worry about their media services at a time when we know they have a lot going on. It’s also best for our estate and lettings partners to follow this approach.”
He added: “For every successful referral that leads to a customer install, we pay commission to the partner and, we also reward the employee who submits the lead too.”
SSE, which supplies energy, phone and broadband to UK homes as well as boiler cover, is another company that is keen to ensure that services are up and running as soon as tenants move into their new property.
The company offers a void energy management solution to ensure energy supplies are restored on day one of the void period.
The process is simple, setting up SSE as the incumbent supplier when agents’ properties become vacant, streamlining the whole void utility process and taking the hassle out of it so agents can focus on what matters to them.
The partnership allows agents to inform SSE when a property has become vacant and oversee the transfer of utilities from the existing supplier to SSE in time for the new tenants taking over residency.
The service provider currently has more than 130 partners benefiting from its void energy offering, and although the company’s letting proposition is a new venture, Edward Shone, who handles corporate affairs at SSE, says that the firm has found the scheme to be “a fruitful proposition which has great benefits for our agency partners”.
He explained: “SSE offers a commission to agents who refer void properties to us. These are negotiated on a case by case basis depending on the individual circumstances.
“Our model presents something different compared to what is on offer from other energy suppliers, with competitive prices and a hassle free service.”
A complete and correct void energy management service should also ensure tenants move into their new property with either a lower priced energy supplier or the cheapest energy supplier.
Shone added: “SSE has become highly experienced in the void energy space through our work in the RSL [Registered Social Landlords] and social housing sector, and now we are looking to increase our involvement the estate agency sector as well.
“We have the experience and knowledge to offer bespoke packages depending on the requirements of the letting agents meaning we can set up a proposition to suit almost any circumstances.”
Offering clients access to a range of complimentary products, including TV, broadband and utilities, via GDPR-complaint tools and platforms, not only adds another strand to agent’s service, which in turn could appeal to more people looking to let out their properties, but also reinforces that this is a reputable and reliable letting firm that landlords and tenants are dealing with, while also helping to generate incremental revenue for your business.
- Virgin Media
- DJ Alexander
*Marc Da Silva is Estate Agent Today and Letting Agent Today Features Editor and Editor of Landlord Today. You can follow him on Twitter @propertyjourno