On the 24th of January, Adam Walker wrote a very interesting piece about the consolidation of the lettings industry where he forecast “that within the next five to ten years the lettings market will be dominated by a small number of mega-businesses with independent agents becoming increasingly rare”.
If Adam turns out to be right, and I think that he might be, it begs the question of why big companies are opting to spend large sums on acquisition rather than relying on their lettings teams to win new business. Is it just easier and quicker for a big corporate agency to let the independent do the graft and build a strong reputation – often in local pockets - then reward them for their years of endeavor or is there a quiet acceptance that landlord clients are inclined to instruct a smaller independent that they can trust and know they will often be served by an experienced team or is it a case of if you cannot beat them…buy them!
In my experience it is a bit of both. Winning new landlords is hard and it takes time no matter if you are a big corporate or a small independent. First you have to find them because, unless they are ‘letting to buy’, they live at a different address to their rental property and are such a mixed demographic that not even the sharpest social media algorithm can accurately target them.
Once you have found them, or more often than not when they’ve heard about your good work and try to find out more about you, they are likely to have an agent looking after them already and so you must hope that they are not entirely loyal to that agent. Lastly, you must convince them that you are the best agent on the planet!
An edge over corporates
There are a few ways to accelerate the process, such as working the room at a new development launch and of course the most important of all - the power of recommendation. Does a landlord favour a smaller independent over a corporate? It’s a controversial question that requires an un-biassed answer! I have been an agent for 25 years and have represented a large corporate agency and Anderson Rose (my own brand) for equal lengths of time and I believe that clients choose people first and their brand second. Relationships are built and maintained through trust, delivery and continuity.
Therefore, it is true to say that a landlord does not care necessarily about whether their lettings agent is a corporate or an independent and they base their choice on who they are dealing with and how present they are (they will always remember those that were there for them in a crisis and the agent that works hard to limit void periods).
Independent agents can have an edge over the corporates because the client perceives that the relationship will be closer and last longer than if they choose that impressive new manager at the big corporate next door who might be here today and gone tomorrow.
When I was at a large corporate agency I, like most of my colleagues, was restless to be promoted to more senior roles within the company and that took me away from the clients that I had brought on board whereas since I launched my own business I have never been far from the front office and my clients all have me on whatsapp! It’s that connection and direct access that truly makes a difference.
So, as long as the big company has deep enough pockets, it is a lot simpler and quicker to go out and buy a portfolio and hand it to their staff to look after. It is pretty much impossible to expect the listers at branch level to win enough new instructions to enable their employer to achieve mega-business status quickly enough to meet their ambitions.
Less and less choice
What are the implications of this trend for people employed in lettings businesses, for tenants and for landlords? For people employed in independent agencies an acquisition causes a significant change in culture which can be very positive for many but won’t suit everyone and those may jump to another independent. For tenants, the impact is less significant as long as the new large agency who is looking after the tenant is delivering a good service. Tenants choose the property and are usually less sensitive about who is managing it unless they have had a bad experience before.
Lastly, for landlords who prefer to do business with smaller owner-led agencies, they may not wish to stay once they have been gobbled up by the big corporate and may migrate to another independent. It follows that new landlords will have less and less choice if they wish to do business with an independent. This could increase demand for the services of independent agencies, making them even more valuable.
In conclusion, whatever happens in the future it is important that people who are employed in the lettings industry are supported by their companies to build strong relationships with their customers and that they are rewarded for building trust and delivering an efficient service. God forbid that the property industry becomes as impersonal as retail banking or the big mobile phone companies. Last time I tried to call Vodafone, I was invited to talk to a chat bot called Tobi! We are such a conscientious industry that I am sure we will not let that happen.
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