How you CAN increase your chargeable fees and JUSTIFY it
16 May 2019 2421 Views
With the Tenant Fee Ban obliterating a key income stream, letting agents should be looking at ways they can increase the fees they charge across the business as a whole. But, with landlords facing their own challenges and looking to cut costs too, how can you encourage such clients to pay more?
The answer is to be more flexible, add value and really give landlords what they want and need.
Gone are the days when customers of any kind will just swallow fee increases for products and services if they can avoid it. We live in a world where price comparison is in our nature and because of this, many businesses partake in a race to the bottom when it comes to price.
Why not enter the race to the top? By simply restructuring your service packages, you could easily convey the added value, win more landlords and upsell to existing landlords.
Review and improve your menu of services to increase fees
Consider tiering your full management service. Depending on how your lettings business currently operates, what’s included in your services and the local market, you could split your management service into bronze, silver and gold, with three different pricing structures and benefits package.
You could introduce the new services and fees to new landlords immediately, and market it to existing landlords at renewal stage.
For example, remove some services from your bronze package such as routine inspections or 24/7 emergency maintenance. Keep your usual management service as it is but also offer a premium package that could include the cost of tenant find (if it doesn’t already), rent guarantee and winter health checks. And when it comes to the legislative and compliance-related stuff, ensure you spell out what’s included, and use this as another opportunity (see below).
By looking at how your services are packaged now and repackaging them, you’ll appeal to the complete sliding scale of landlord, from those who want a low-cost and more DIY approach, to those who are willing to pay for the freedom to be hands-off.
The key is to raise the standards and quality of the services you offer, not become the budget airline of the lettings industry by adding on charges left, right and centre.
Use your industry knowledge and expertise to your advantage
The Private Rented sector is a minefield when it comes to legislation and compliance – two areas that the 2018 English Private Landlord Survey revealed letting agents excel at over landlords.
The majority of landlords are amateur or accidental and own just one or two rental properties. They often assume that your fees merely cover the answering of calls from tenants about broken boilers. Few of them realise their obligations around things like Right to Rent checks, issuing of How to Rent Guides, Energy Performance Certificate requirements and gas and fire safety.
You can provide them with the reassurance that you’ve got them covered – for a fee – and even look at offering compliance and licensing reviews in line with local authority standards and schemes.
At the more professional end of the landlord spectrum, some investors will be looking to grow their rental property portfolios. They’ll see smaller landlords leaving the market as an opportunity. If you’re an estate and letting agent, why not utilise the expertise of your sales department and offer a property sourcing service? You could do this ‘free of charge’ in return for a management contract, or charge a one-off fee.
Offer market appraisals/rental consultancy
The effects of recent tax changes on private landlords are now starting to bite, and as a result, buy-to-let yields have dropped to a three-year low. In fact, almost 15% of landlords aren’t making a profit at all on their rental properties.
As a letting agent with vast experience of rents in the local area and tenant expectations, you are in a great position to help landlords increase their profit margins. Think about providing an appraisal service where you can advise on small improvements to the property in order to achieve higher rents and potentially minimise voids.
More people are renting as a lifestyle choice, and by dealing with tenants every day, you have an insight into what they want and need. More storage, a fresh lick of paint and new bathroom suite is always a bonus, but think about less materialistic aspects like affordability and security.
Would solar panels that reduce their monthly energy bills and a longer-term tenancy agreement be of more value to them, for example?
Why not reduce your costs as well?
By outsourcing your property management to a third party, you can not only potentially increase your landlord fees but cut the cost of service delivery too. ARPM has a team of professional property managers that become an instant extension of your team but without the overheads.
For a fixed monthly fee per property, we look after your landlords, properties and tenants white-labelled under your brand.
Find out how ARPM can help your lettings business to survive, prosper and grow.
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