Our Strategy

We recently were engaged with an agent to help increase lettings revenue, they were market leaders in the core area they traded, they had a very good ‘valuation’ to ‘let agreed’ conversion rate and they commanded a fee in line with their competitors. Whilst incremental gains on every metric will improve their results, they were looking for some ‘low hanging fruit’. 
 
In our opinion that the 3 things any letting agent wants are:  
 
1: More landlords (including existing landlord retention).  
2: More revenue per landlord 
3: Greater efficiency in systems and processes, including compliance.  
 
With properties letting within hours of going to market, and the acceptance that disrupting another agent's landlord is not an overnight result, we looked at point 2. More revenue per landlord, whilst there are lots of ways of doing this, we wanted to make sure that there was also a landlord benefit rather than just a cost increase. So, we looked at rent increases and renewals. 
 
From experience, many agents are guilty of two things when it comes to rent increases, firstly at the point of renewal the property manager suggests a minimal rent increase of say £25/50 (the path of least resistance but not necessarily in line with open market rents) and secondly, once a tenancy enters a periodic tenancy, they rarely conduct annual rent increases as it gets “lost in the system”.  
 
Our process with the agent we worked with was to: 
 
- Export a list of all tenanted properties and filter by last rent increase. 
- Ask the lettings lister to conduct a desktop valuation on each property including a market comparable report, as if they were going to a new valuation. With the vast array of fantastic-looking reports containing relevant and compelling market data out there, this can be done with just a few clicks. 
- Add annual rent review dates to your CRM and make sure you add this to your internal processes. 
- Train the member of staff responsible for renewal and rent increases to have meaningful conversations with landlords and tenants using market comparable reports and any tools you may use on a valuation to determine the price. 
- Start ringing the landlords out of fixed-term contracts to discuss the rent review. 

 
According to the HomeLet rental index for February 2022, the average rental price for a new tenancy in the UK was up by 8.6% from the previous year, let's presume that it was a similar increase the previous year, have you increased every rent (not just relets) by 17% over the past two years? 
 
On the periodic tenancies, the agent we worked with achieved an average of £176 a month rent increase, not only are their landlords over £2,000 a year better off but at 11% managed fee the agent has generated £232 a year more revenue, multiply that by an average of 280 managed units and you could be looking at £65,000 more revenue a year.
 
Whilst we all assume that tenancy renewals and rent increases are a matter of course, agents need to make sure that the rent increases are in line with real market value in order to continue to deliver the best results for their landlords. If we can do this and combine it with all those tenancies that slip through an agent's net, this consistently adds to an agents bottom line not only whilst delivering fantastic customer service but also without costing their client a penny more.