There is no doubting that 2020 has been a challenging year for all industries, with the lettings market being no exception.
Following the seven week shut down in the spring, the market has bounced back admirably, with huge levels of pent up rental demand keeping activity high over the summer.
This mini-boom has allowed letting agencies to get back on their feet and helped landlords to find tenants for their empty properties.
However, it’s far from blue skies ahead, this recovery has taken place against a backdrop of a ban on evictions, significant and growing rent arrears and the need to adapt to running a business in a post-pandemic landscape. With winter now looming and Covid-19 restrictions tightening once more, the challenging times are far from over yet.
Cracks are already starting to show, with analysis from TwentyCi showing 713 agency branches failed to reopen after the spring lockdown - equivalent to a 3.5% drop in the total number of high street offices.
Meanwhile, a survey of over 2,000 landlords carried out by the National Residential Landlords Association found that almost a fifth of respondents expect the pandemic to have a significant negative impact on their business.
This has led to landlord confidence dipping by 56%, with many investors less confident of being able to achieve their goals over the next year compared to three months ago.
Unfortunately, this is only the start. The furlough scheme ends later this month and the economy is officially in recession for the first time in 11 years, many landlords have stopped buying and Boris Johnson has announced he wants to turn generation rent into generation buy.
For these reasons we believe the lettings industry needs a gamechanger, something positive that shows there is light at the end of the tunnel. We believe the Advanced Rent Option (ARO) is that gamechanger, helping agents to win more instructions and providing landlords with the financial freedom they crave.
The story so far
The ARO (Advanced Rent Option) provides agents with the opportunity to offer landlords a year's rent in advance while still collecting rent on a monthly basis.
For agents, the ARO is a fantastic conversation starter and differentiator with huge lead generation and prospecting potential. It allows agents to re-engage with their databases and reinvigorate their marketing strategy.
Now more than ever, landlords will be looking for options which can provide them with financial security in an uncertain world - the ARO does just that.
The ARO began its journey in 2018 and like all the best ideas, it's a simple concept and all the more powerful because of it.
Since inception, we have been testing and refining the ARO as a prospecting and lead generation tool. We have also been developing robust processes and procedures to make it available to a select group of members of The ValPal Network on a fully-funded basis.
An exclusive offer for agents
For the next phase of its development, the ARO will be made available to approximately 1% of the industry, circa 200 letting agency offices, with a maximum of three ARO agents per area. There will also be the possibility of exclusivity for the right businesses.
Very soon, we will be sending out a prospectus showcasing the results of our pilot scheme. At this point, we will also set out the requirements which must be met in order to be considered for a strictly limited ARO license.
We are looking for reliable, proactive and go-ahead agencies who understand the value of the ARO and how to use it to fast-forward their businesses and grow their managed portfolios. We also want to work with firms which have a strong reputation and standing in their local areas to represent and add value to the ARO brand.
The ARO is a gamechanger for the lettings industry and a gamechanger for the agents able to offer it. ARO provides security and peace of mind at a time where both these commodities are in high and increasing demand and short and diminishing supply. It acts like a magnet, attracting landlords desperate for some certainty in an increasingly uncertain world.
If you are determined to ensure the continued success of your agency and to prosper despite the challenges that face us all, don’t wait to receive the prospectus, register your interest here and we will be in touch. We look forward to hearing from you.
*Craig Vile is Director of The ValPal Network