The impending tenant fee ban is officially coming into force on the 1st June.
In England, the ban will prevent agents or landlords charging a tenant any kind of fee including those for moving in, rental contract preparation or renewal, moving out, inventory preparation, tenant referencing and right-to-rent checks. Tenants will still be required to pay a deposit, which will be capped at a maximum of five weeks’ rent.
The legislation also entails tough penalties of up to £30,000 in case of breach.
This is certainly a big cause of concern for many businesses in the lettings industry, especially considering that tenant fees currently make up around a fifth of an agents’ income, as estimated by the ARLA Capital Economics Report “Letting the marked down?”.
The bill also tackles any attempt to make up for the lost fees, stating that landlords cannot increase the rent during the initial months of the tenancy, or over the entire duration of the agreement.
Agents are now challenged with the arduous task of making up the 20% in lost income. If you are running a letting agency there are different tactics you can put into action to mitigate the effects of the tenant fee ban:
Streamline your business to cut operational costs
As a starting point, most companies will naturally be looking at economising their business, and technology offers a way to achieve this by improving efficiencies in the business and make savings. By automating all processes, letting agents will benefit from unnecessary manpower needed to run daily business operations. This will lead to additional time available to your team to focus on increasing your portfolio of clients and provide excellent service.
Among the many other benefits, property technology aids smoother rental collection. Automated rent demands can be set up, ensuring you stay on top of rent arrears and never miss rental payments.
There are many softwares on the market available to letting agents, and investing in a good property management platform will effectively improve business-wide productivity and profitability in the long-term.
Increase the range of services to your offering
Rather than simply increasing landlord fees to recover lost income, adding new services to your current offering is a great way to attract new business leads.
For instance, virtual property management is a relatively new type of service being taken up by self-managing landlords, bookkeepers and property management companies looking to expand their service offerings. It offers a great opportunity to lettings agencies too. Landlords looking to hire a lettings agent are more likely to contract an agency with virtual management, as it allows for seamless communication between the two parties should they so wish.
A big benefit for lettings agencies who offer virtual management, a relatively new but growing phenomenon in the UK, is that it can reduce personnel costs and allow most of the admin to be automated rather than being done by people.
Property management software companies offer training to virtual managers so they can gain the specialist knowledge of the software to manage third-party portfolios. It’s vital for virtual managers and assistant to have an excellent understanding of the software to be able to offer specialist help.
Boost your marketing
Growing your database of customers and generating new leads should definitely be a priority if you are looking to replace your tenant fee income. The best way to achieve this is to increase your team’s focus on marketing. Ideally, you will be looking at targeting landlords with large portfolios looking for a long-term investment with you.
Unfortunately, marketing activities are often overlooked by many letting agents’ whose time is mostly taken up by the daily grind of administrative operations. It is certainly important to mention your business’ achievements and how good you are as agents, and investing time to build your reputation as a local expert is also important when establishing new relationships, as it builds trust in your business. Whether you engage in traditional PR activities, networking events, sharing tips on social media, writing a blog post or even writing to your local newspaper, these are all great ways of sharing local property information and talking to landlords about things they most care about. As a result, you may find more landlords will engage with you and maybe keep you in mind for the next time their tenant hands their notice in.
Increase team motivation
To increase your conversions, you need to increase your team’s performance. Through this tough time ahead, they will be your stronger asset.
A strong-performing sales team is a motivated team. Sales is a very competitive environment, so train, organise and empower your staff to offer more in order to win more business. They need to be focusing on the front end, maintaining consistent contact and supporting all leads throughout their customer journey and there are great CRM systems on the market that can help you simplify and streamline the process. There’s no excuse for your team to spend more time filling out forms than winning clients.