Enhanced customer care strategies, relationship-building schemes, cost-cutting measures and new revenue streams can’t help the lettings industry if the fundamental underlying issues aren’t addressed first.
We can’t have a situation where someone walks past a window of properties, goes in, picks a nice property to live in, pays a large monthly rental relative to their income, and then isn’t afforded the usual customer service experience you’d find with any other retailer. The tenant should be treated like a highly valued customer.
Renting should be the preferred option to buying. When you rent, you can live in areas you could never afford to buy in, have a home you could never normally afford to live in, and live a lifestyle that would normally be out of reach.
You have none of the maintenance issues or headaches of the homeowner, and you can up sticks whenever you like. It should be what everybody wants to do, at least to begin with.
As long as the needs of the tenant (a nice home), the landlord (low costs), the contractor (a good living) and the agency (a good fee) can’t be satisfied together, there will always be issues.
This creates the wrong behaviours in everybody and drives down service levels and profits.
It’s a broken value chain.
Purpose-driven lettings agency – A better business model
Successful businesses have strong value chains, where everybody involved adds value and benefits from adding that value.
In building a car, everybody who designs, makes, tests and adds a part is adding value. Everybody collectively benefits. The needs of each role are fully satisfied.
When a hotel manages a wedding ceremony, the same applies – everybody involved adds value, a great experience is delivered and fantastic memories are created.
The purpose-driven lettings agency creates value for everybody, including themselves. They are:
1) A provider of exceptional homes and living experiences to their tenant customers.
2) A provider of first-class property investment management and advice to their property investor clients.
3) They become the landlord and property portfolio manager on behalf of their investor clients and a premium provider of exceptional living experiences for a portfolio of tenant customers.
The agency is now the landlord. They’re not subletting – they’re acting as the landlord and taking care of their property investor clients’ investments. They’re now creating lots of value.
The tenant is their primary customer. They can sell new services to their tenant customers and even ‘upgrade’ them to nicer properties as they become available.
They should aim to keep that tenant, eventually finding and selling them a home when the time is right. They’re incentivised to maximise the returns for their property investor clients.
With this approach, we have a strong and complete value chain. Everybody wins and is incentivised to work harder.
1) The tenant is presented with a home that feels like a home – so they’ll look after it like a home.
2) The landlord becomes a property investor client with a business case for that investment which includes a preventative maintenance plan, and is happy that the investment is in the hands of the property management expert.
3) The agency is now able to create additional value for the tenant (customer) and landlord (investor) and so can command a higher fee, build a strong brand and have fewer costly interruptions to their day.
The benefits of a purpose-driven lettings agency
The agency (as landlord) now has, say, 200 tenant customers that they’re looking after. The agency can now approach local businesses, gyms, health clubs and restaurants and organise special rates and discounts exclusively for their tenant customers. They can introduce cleaning services, discounts on taxi services, and even organise social events for their tenants.
The agency (as a property investment adviser) can offer additional services and value to their investor clients. The tenant, now as a highly-valued customer, talks highly of the agency, attracting other tenant and investor clients, staying longer and taking more care over their home.
The tenant stays with the agency, renewing many times and taking care of their home. They recommend the agency to other tenants, landlords, vendors and buyers.
The agency charges a good fee which the landlord is happy to pay. Tenants benefit from improved service levels which facilitate longer tenancies.
Tenants view the house or flat they’re renting as a home, and so are invested in helping to maintain the property. They feel valued and will be happier to pay increased rent and to recommend the agency to other potential tenants.
Happy tenants and happy landlords give the agency a good reputation that attracts new tenants and property investor clients.
For this to work, the following is required:
1) Preventative maintenance will be key. Agencies must adopt a rigorous preventative maintenance programme, repairing and replacing things before they break.
2) White goods must be replaced before they break, after X years of service.
3) Inspections should identify and fix things in advance of issues occurring.
4) When taking on new properties, high standards must be set at the start with perishables replaced, cisterns cleaned, boilers serviced, old white goods replaced, etc.
5) Annual or bi-annual refurbishment and regular redecorating.
This will dramatically cut costs in maintenance, save the agency time, and provide a better service to tenants. Everybody wins! Welcome to the purpose-driven letting agency.
*Paul Freudenberg is founder of Awardaroo