Why agents should consider including an advanced rent option
As a letting agent, without doubt, your most difficult task will be attracting landlords, who can sometimes be difficult to find.
Most agents, though, have the same USPs when trying to win the custom of landlords – which means they aren’t really USPs anymore.
This means, when a landlord is looking at a letting agent, it’s hard for them to differentiate, with everyone offering pretty much the same services and benefits. The only thing they then have to go off is reputation and gut instinct. Or you might struggle to attract them at all.
How do you capture their interest? How do you stand out to landlords in a crowded, competitive marketplace?
You need to differentiate, to offer a real USP.
Offering an advanced rent option (ARO) is one way of doing that. It gives you a hook by which to lure would-be landlords in, saying to them “would you rather be paid monthly or all in one lump sum, 12 months in advance?”
By offering this hook, you are likely to experience a significant uplift in leads. From this, you are one step closer to getting people in front of you and sitting down with them to talk about possible instructions.
How does the Advanced Rent Option work?
ARO sees landlords paid upfront and in advance even though the agent is still collecting rent on a monthly basis.
It supplies landlords with a lump sum to help manage buy-to-let mortgage payments or grow their property portfolio – or, alternatively, pay for things like a holiday or new car.
Subject to referencing, an ARO can provide landlords with up to a year’s rent in advance, less standard letting agency fees.
To put this into monetary terms, consider the following example, based on a property with a monthly rental of £1,200. Landlords could receive an upfront lump sum of £10,231 by signing up to an ARO, with the final figure calculated by discounting standard annual agent fees costs of £2,592, new tenancy setup fees of £395, a rent guarantee of £432 and an emergency maintenance float of £750 from the total annual rent of £14,400.
A three-tiered approach
The Advanced Rent Option could be offered as part of a three-tiered approach, with a standard service, a rent guarantee service and a premium listing – where the advanced rent option comes into play. The latter might not be right for everyone, but it will be right for some.
And, as a way of generating interest in your services, it’s a brilliant hook. Even if landlords don’t take up the ARO option, they may be likely to opt for your rent guarantee or standard service – which means you still win custom and instructions.
We know, too, that it is proven to work, with an ARO trialled by Choices Estate Agents and its associated brands using its Primary Tenancy service since April this year.
The next stage in this development is a second stage pilot introducing a select number of letting agents, with a trial that will run until late 2020.
In a time of the Tenant Fees Act and continued political and economic uncertainty, it’s more important than ever that letting agents successfully appeal to landlords – and offering an advanced rent option could be one way of doing that.