Letting agents can keep growing in a challenging market
07 June 2023 3718 Views
It’s no secret – 2023 is a difficult year for the property industry. While rising rents should lead to increased income from commission, a slowdown in the sales market means that agencies are having to rely more and more on their rental portfolios. Meanwhile, inflation has also made it more expensive to run either kind of agency.
With headlines like these, it’s no wonder that many letting agents are worried. Our most recent Rental Confidence Index showed that fewer than half of UK letting agents felt optimistic about the future of the lettings industry, down from more than three quarters last year – although the number of agents who said that they were pessimistic was still only around 17%.
But with the right approach and proven PropTech on your side, there are still growth opportunities out there. Here’s how letting agents can grow their businesses – and give themselves more reasons to be cheerful – in a challenging market.
Provide value-added services
After strong growth in buy-to-let investment during the 2010s, when more than 500,000 new landlords entered the market, industry groups now warn that more landlords are leaving the sector than joining it. While the overall size of the private rented sector grew in 2022, agents are competing for a smaller pool of landlords with bigger average portfolio sizes. s. Add to that the fact that many buy-to-let investors prefer to self-manage despite the benefits of working with an expert agent, and it can often be more productive to upsell your existing landlords than canvass for new ones. Only around 18% of landlords are fully managed, while most stick to more limited services like tenant find only.
Proven PropTech can be the selling point you need to convince landlords that they need full management. PayProp gives landlords instant access to their full owner statements as well as live payment notifications, letting them check in on their portfolios whenever they want, as well as oversight over maintenance tickets and automatic notifications of actions taken. PayProp’s automated arrears reminders also help tech-enabled agents to recover late rent payments more effectively, giving landlords priceless peace of mind at a time when their margins are shrinking. By increasing rent collections, agents can bolster their landlords’ income and their own commission – and potentially charge a higher fee based on their results.
Even fully managed clients can be upsold, as industry educator Sally Lawson pointed out at PayProp Connect last year. Many landlords are willing to pay extra for optional add-on services like furniture packs or virtual property tours.
Providing excellent service can also help convince your existing landlords to keep their investments instead of selling up, and to stay with the agency that does all this high-value work for them, further securing your lettings income.
Think like an investor
As an expert letting agent, you’re in the best position to know what types of property in your area are available and command the highest rents – and bring in the most commission. You can also back up that market knowledge with technology: PayProp’s new management reports feature includes the option to benchmark your rents against the average in your area.
We know from our Rental Confidence Index that over 13% of letting agents are seeing landlords grow their portfolios. You can help them identify opportunities that would provide a good yield and earn commission on the sale if you can match them with another property on your books – perhaps from a landlord who is looking to divest. And once they own the property, armed with your black book of contractors and your rental market expertise, you can advise them on renovations to make it as marketable as possible to tenants in your area.
Use technology to boost productivity
In lean times, it’s more important than ever to get the most out of every resource you have – and in lettings, the biggest resource you have is the expertise of your agents.
Dedicated letting agents can secure new business, wow landlords with their service and guide investment decisions using local market knowledge – but if they’re always tied up in admin, where will they find the time?
Using PropTech to automate time-consuming admin tasks saves your agents hours every week that they can spend on more productive work. PayProp automatically matches incoming rent payments to the right landlord, tenant and property; deducts your management fee and payments to contractors; and allows you to pay out to the landlord in just a couple of clicks. A couple more clicks and you’ve sent out professionally branded statements and invoices, and then if necessary you can send automated e-mail and text message payment reminders to any late payers, proven to greatly increase collections – all before you’ve finished your morning coffee.
PayProp’s automated rental payment technology has given UK letting agents a competitive edge in good times and bad since 2015. Book your free demo and discover the PayProp advantage.
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