Why in-house isn’t always best for your lettings business
24 October 2018 1244 Views
The area of staffing can be a very uncomfortable one, but as the future of the lettings industry crystalises, it’s clear that employment dynamics will change. Making your agency more profitable should be a priority in the coming months and examining staff overheads is a great place to start.
You may like the hubbub of your team, crammed into a comfy office with plenty of water cooler moments but get used to the fact that the size of your payroll is never simply the salary of an employee, and so it may need to shrink.
Overcome by overheads
On top of the annual salary, which is just over £23,000 on average for a Property Manager according to payscale.com – although our experience is that this figure is slightly misleading as that wage will buy you a less experienced manager – letting agents have numerous other costs to consider.
Employers pay Class 1 NICs of 13.8% on all earnings above the secondary threshold of £162 per week (£157 for 2017/18) for almost all employees. Auto enrolment workplace pensions should also be factored in, with employers contributing 2.0% of qualifying earnings until 6 April 2019, rising to 3.0% thereafter.
Just making a successful appointment in the first place can cost you thousands of pounds. A study by Oxford Economics found hiring/replacing a member of staff costs over £30,000. That’s money lost on the recruitment process (which Undercover Recruiter puts at an estimated average of £3,000 but higher if you’re using an agency that charges 20-30% of a final salary) and missed revenue while getting a new employee up-to-speed. In fact, it takes as long as 28 weeks for a new worker to reach their optimum efficiency.
Lastly, the small things quickly add up. Training, obtaining additional software licenses, IT set-up and support, computer, stationary, HR’s time in employing a new starter, accounts processing another wage, a company car, projected money spent on holiday/sickness cover, possible maternity cover and even staff party ‘per head’ costs add up to almost £14,000.
Find the right balance
The balance, however, is to trim the fat and reduce expenditure without compromising on customer service or jeopardising your brand. We especially agree that agents need to review their service levels to stay afloat. That doesn’t mean ditching services to save money. On the contrary. Letting agents who offer new and improved services will increase business opportunities, especially as the profit margins attached to property management can compensate for any income loss from the tenant fee ban, for example.
This is where outsourcing delivers cost saving solutions – it is possible to offer more for less. Many aspects can be outsourced, with the core saving coming via a ‘pay only for what you use’ setup – in our case, you pay per property we manage, or pay only for the rent collection and tenancy administration you need. There are no recruitment costs, no lost income during a ‘bedding in’ period, no costly training or underutilised resources.
With ARPM Outsourced Lettings Solutions, you can gain as many experienced Property Managers as you need in an instant. We offer a 24/7 emergency maintenance helpline and a fully staffed centralised office in North London that’s never compromised by sickness, annual leave, Bank Holidays or under resourcing.
Centralise to improve communication
But communication is critical in property management, I hear you say, and you’d be right. Poor relationships will lose you clients and that’s not what’s needed it the current lettings climate. If a client – tenant or landlord – is ignored, they feel undervalued and will question your professional integrity. A landlord may weigh up whether your service justifies the fee and a tenant may be quick to leave negative reviews online, damaging your brand along the way. It’s highly likely that you’re actually a competent property manager or letting agent who’s over worked, under resourced and has merely taken your eye off the ball.
Today’s consumers are used to instant gratification, but thanks to live online chat facilities and messenger services, they won’t always expect it face to face. Lettings, however, is somewhat behind the curve. If you can’t respond to emails and calls in normal working hours – let alone evenings and weekends - the perception of your business is altered forever.
If you’re concerned that cutting staff will lead to a drop in service levels, then don’t. Outsourcing will bring your level of communication up to a professional and expected level - as long as you partner with the right company – and reduce your in-house staff costs.
Contact us now to discover more.
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