Renting a luxury property might seem challenging, and agency costs reflect this. Naturally, when thinking of luxury, landlords imagine sharp looking real estate agents and a commission fee way higher than £1000. However, the sector’s future might look differently, as a new generation of letting agencies has set out to revolutionise the sector and are already providing the same services for less money and in less time. If it is true, can landlords expect to rent out a £15,500 PCM luxury property and pay £700 commission instead of £27,000?
In short, the answer is Yes.
Since luxury properties are considered to be more difficult to rent out and maintain, landlords are forced to pay 15% of their annual rent, the industry’s standard for a high end traditional letting agent. High-end letting agents argue that such price is based on the high marketing expenses required to find tenants and increased maintenance costs.
However, such calculations often seem unreasonable not only to the landlords, but to the new generation of letting agencies as well. Online letting agents—the ones that have optimised their services by taking a significant part of them onto digital platforms—do not consider luxury properties to be exceptional and choose to charge the owners a fixed price applicable to everyone.
A perfect example to this is a recent contract between a online letting agent Reneza and the owner of an apartment on Park Lane, Mayfair. Reneza has let out his property with monthly rental value reaching £15,500, and is fully managing it for as little as £59.
The commission fee paid by the landlord was £708, almost 4000% less than the traditional letting agent fee. [Additionally, the owner is now able to track all the activities in a digital dashboard and receive real-time notifications about the property. Though, chances are, an owner like that, does not really bother anyway.
Reneza claims that they managed to convince the property owner to give them a shot and prove him that letting a luxury property does not differ from a regular property and requires a similar amount of resources. While both regular property owners and luxury landlords expect the highest quality of service, in its essence, the operations and price does not necessarily need to differ and landlord should not be charged tenfold sums.
Whether it is luxury or regular, the process of renting out a property comes down to few things. Firstly, it is finding the right tenant. Reneza trusted Movebubble renting app to find the right people to rent the luxury apartment. The search did not take long, and the new tenants were ready to sign the contract in less than two weeks.
After the contract is signed, letting agent’s duty is to manage the property in a way that suits both the landlord and the tenant. To ensure successful property management, Reneza’s representatives work all over the UK and are on a network that allows them to respond to the queries and alerts from the properties closest to their location. It allows them to efficiently perform regular inspections and rent collection, if needed.
Still, for many landlords the lower property management costs bring doubts about the quality of the services. The market needs quite a lot of education in regard to sharing economy for property management because landlords find it hard to understand, how come property can be fully managed for a price that is up to 5 times lower than the standard.
While in fact it is very easy to explain: landlords actually do not need a full-time real estate agent around their properties and pay him commission for the whole time. Landlords could easily only pay the agent when there is an actual need for his help. For instance, in case of midnight emergencies with neighbours or extra inspections.
Online agencies successfully apply these principles and prove the landlords that the cost reduction is possible, and sometimes even necessary. Online letting agents manage to reduce the expenses by optimizing the manual workload, and building a network of agents, that they can tap into using sharing economy principles.
Therefore, the agency saves thousands on wages and landlords save thousands in fees—a very important aspect, having in mind the Tenant Fee Ban that will likely increase traditional letting agency fees significantly as the agencies will lose as much as 20% of their income.
For the new generation of letting agents, technology not only helps save money, but also assures that all parties are in the loop and provides the much desired efficiency that has always been the pain point of the sector. Nowadays, successful property managers need to be connected with the landlord and the tenant all the time.
For property managers technology is a tool to keep both landlords and tenants satisfied with the services, and for the real estate agents, digital solutions reduce the amount of manual tasks, allowing them to focus on the quality of their work.
Needless to say, technology benefits landlords far beyond the saving aspect. Reneza has clients with portfolios of 60+ properties scattered all across the UK. For such landlords, the fact that they only need to contact one agent is a huge relief.
Saving time and receiving transparent information about their properties is also a reason why luxury property owners choose to switch to online letting agencies, that prove they are able to manage the properties successfully for more and more landlords everyday.
Even though online letting agencies are still a novelty in the market that once was seen as a steady one, their competitive advantage lets the observers guess that the future of letting will be digital. The landlords, who feel that they were tricked into believing they pay reasonable amounts for the services they receive, are swiftly moving onto digital platforms.
In fact, the shift is quick not only because landlords hurry to start saving money. Those who choose to trust an online agent with their properties, do not waste time for face-to-face meetings with traditional letting agents. Starting to let properties online only requires registering, providing some property details and choosing one of the available service packages.
According to Reneza, the registration and uploading a property onto the website takes less than 5 minutes, and there is support staff online to answer all the questions that emerge throughout the process.
As if it that does not sound good enough, by signing up to Reneza’s platform and letting them know, you found out about them through Landlordzone, landlords will receive two months of full property management for free! Make sure you do that and enjoy a worry-free letting from the moment they register on the website.
©LandlordZONE® – legal content applies primarily to England and is not a definitive statement of the law, always seek professional advice.