Renting has long been characterised as a stepping stone onto the housing ladder for the younger generations. But in recent years, this has shifted with a growing number of families and over 60s finding themselves permanently renting.
Clearly, the renting demographic is diversifying which, if approached the right way, represents abundant opportunity for the Private Rented Sector (PRS).
The traditional approach focusing on churn rather than retention as well a high rental costs that don’t match up with customer experience is undergoing change. As the renting demographic expands so does legislation handing greater power back to renters.
As it currently operates, the PRS is not fully fit for purpose and those not prepared for the inevitable changes ahead will find themselves at a disadvantage.
However, those providers smart enough to recognise the opportunity this larger pool of renters serves, and crucially respond accordingly to renter demand will thrive in the new renting environment.
Expectation vs reality
We recently conducted a renter poll which established the biggest motivators when it comes to renting a property. Top of the pile was feeling safe and secure as well as feeling part of a community. Alongside this, 68% of renters would be happy to pay higher rent for a better quality of service.
Superior levels of service as well as establishing a sense of community is the cornerstone of the Build to Rent (BTR) offer. Renters are speaking up about what they want to see from their providers and BTR is listening.
Traditional letting agents need to begin to do the same.
High price points that don’t correspond with levels of service will see renters looking elsewhere. The tenant fee ban may well result in an initial loss of revenue for agents who have historically focused on churn, but those who shift focus to retention are far better positioned to find alternative revenue streams.
With renters happy to pay more for better service there is untapped opportunity if renters feel a service offer is worth it.
Quid pro quo
But how do you establish what renters value?
This is where the PRS can learn from other sectors. Customer feedback is critical to understanding your business and the needs of your customer and the more this is adopted by the PRS the better it will be for everyone.
Not only does feedback highlight gaps in service that may have been missed, but it also provides a unique opportunity to identify what renters would be happy to pay more for and thus uncover potential new revenue streams.
This kind of insight is crucial to the successful lettings business of the future and is a sure way to keep ahead of the competition.
We believe that adding value to existing lettings services will enable traditional agents to flourish in the changing market. By giving renters access to exclusive perks in exchange for feedback, our clients get a 360-degree understanding of their business and what their renters really want.
With so much change on the horizon, letting agents need simple and easily adopted solutions to differentiate themselves from the competition and to maximise on the opportunity the growing renting demographic represents.
Where BTR has the backing of big investors and therefore more revenue to put into delivering higher quality of service, letting agents need to be looking at innovative and out of the box ways to do the same. Although, an initial investment in either time or money, these solutions will not take long to begin to pay for themselves.
I don’t believe rents are going to decrease but enhancing existing service offerings making them as attractive as possible is the surest way of retaining renters who value your service, grow your existing business and crucially, identify new revenue streams.
*Jonathan Stein is chief executive officer of Vaboo, a perks and engagement platform which adds value and uncovers new revenue streams for letting agents.