True cost of your lettings team
05 April 2019 975 Views
Staff are usually a business’s biggest fixed cost, but did you know that the true cost of an employee is almost double the annual salary?
It’s no surprise, then, that both sales and letting agents are looking to reduce the number of people on the payroll, according to Zoopla’s State of the Property Nation report.
In the lettings industry, the average property manager salary of £23,500* could very quickly equate to an actual cost of more than £40,000 a year, and here’s now.
Recruitment and training
Just making a successful appointment in the first place will cost you dear. An online advert here, a newspaper advert there – those are expensive enough – but when you consider recruitment fees…
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 – quantified as a cost to the employer of £25,000, according to the same Oxford Economics study. And this doesn’t even take into account ongoing training.
Contributions and benefits
On top of wages, the payment of ‘secondary’ Class 1 National Insurance contributions need taking into account. 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 3.0% of qualifying earnings as of April 2019.
And what about commission and bonuses, not to mention company cars, allowances and employee benefits, for example?
Equipment & software
Unless you’re relying on a rolodex and carbon copies, your lettings business will probably run on a number of systems and software solutions. Keeping up with the latest versions and new innovations is expensive, especially when your technology resources need to be spread thinly over new channels, such as social media, customer relationship marketing and website analytics.
There are often costly licence fees based on number of users and extra charges for things like IT set-up and support as well as the physical equipment such as mobile phones, computer and stationary.
Calculate the real cost of your lettings team with this FREE tool
At a time when all letting agents should be reviewing their costs, understanding the real cost of your employees is critical.
If the figures are frightening you but you have a pressing need for a Property Manager, put outsourcing on your radar. There are no recruitment costs, no lost income during a ‘bedding in’ period, no costly training or underutilized resources. With ARPM Outsourced Lettings Support, you can sign up to our service – white label if you desire – and gain as many experienced Property Managers as you need in an instant. And the real perk? You only pay for the management you need as part of a fully scalable service.
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