A practical guide to surviving the Lettings Fees Ban
It's been a long time coming but the Tenant Fees Act is finally knocking on our doors on June 1st 2019. Although great news for tenants, you and your landlords aren't so sure.
But while everyone is blabbing about what's being banned, our team wants to give you actual advice to help you stop agonising and start bringing your agency up to speed.
So what's really at stake with the Ban?
First things first. We know this is a big deal, especially for independent, smaller agencies who are not large enough to offset the loss in fees through the sheer volume of business. After all, we're talking about 700 million a year the sector is about to lose (of the annual £4 billion).
Fear not, though, times of crises and financial pressure often push innovation and thinking outside the box. This is the time to sit down, review your business and fuel growth in other areas - be it through additional revenue streams, incorporating technology or automating processes.
We know what you’re thinking: “but lettings agencies don’t need technology to be successful”, after all, it’s an old school system based primarily on relationships with people. However, accepting digital transformation will allow you to put landlords and tenants at the core of your business, shifting focus away from admin tasks and maintenance management to building genuine relationships with your customers.
Businesses which can’t or won’t adapt will get left behind, and as they do realise they need further tech, it may be too late. - Matthew Driscoll, Woodcock Holmes
What you need to avoid
While we agree that passing on the costs to landlords is a feasible strategy, we don’t think it will pay off in the long-term. It could tempt landlords away from the high street agents to cheap online providers. Remember, you want to think of a plan that puts the landlords at the heart of your business and charging them higher fees isn’t going to cut it.
Charges EXEMPT from the ban (and things to focus on)
- Holding deposits (though these will be capped at one week’s rent)
- Cash security deposits (capped at five weeks’ rent)
- Deposit replacement product (provided it is offered as a choice)
- Renewal and exit fees (when requested by the tenant)
- Defauts by the tenant (late rent payment, excludes lost keys)
How to turn your greatest pain into your greatest strength
4 ways to offset revenue loss:
1. Open up a new revenue stream with Reposit
We know deposits are a hassle: joining a scheme costs you money and registering it carries the risk of heavy fines. So why not alleviate this burden and monetise an already fixed process. You can earn commission for every Reposit you sell (provided you offer it as a choice to tenants) and receive the funds within 48 hours!
2. Automate, automate and automate
Automate manual tasks by embedding a pre-tenancy software product. This will remove a lot of the tenant/agent communication burdens and give you free time to talk to landlords and strengthen your customer service.
For example, Tenant Shop provide a management software that enables you to manage the whole pre-tenancy journey and could also provide a new revenue stream (Disclosure, Reposit are integrated into Tenant Shop).
3. Develop a USP and a marketing tool
With Reposit, your landlords get an 8 weeks’ worth of rent cover beating the 5 weeks’ security deposit cap set by the government. This will act as a unique selling point to help increase the number of properties you manage. Landlords are rightly concerned by only receiving 5 weeks’ worth of cover and will flock to an agent offering more!
4. Maximise social media
Most of our landlords and 50% of our tenants come from reviews they’ve read online, often without a property in mind. - Jack Barnett, Director of North East
With this in mind, Facebook, Twitter and LinkedIn should be your best friends. Online presence and positive reviews can attract new landlords and high-quality tenants.
Start leveraging social media by posting pictures of properties, sharing customer reviews and successful customer experiences. Once you become more comfortable with the online world, you can share blog articles or ‘how to’ guides for living in the area of your managed properties. You can even consider offering FaceTime and Skype viewings to keep up to date with industry changes.