Why Letting Agents have Negative Stereotypes
“When I grow up, I want to be a letting agent”, said no one, ever.
In general, letting agents have a terrible reputation. A recent study found letting agents (and estate agents) as the least trustworthy profession other than politicians, journalists and bankers. Ouch. How has this happened?
Reputations Built on Bad Traditions
Traditionally, letting agencies have prioritised the short-term interests of the landlord and considered the tenants’ interests as much less important. This can be attributed to the misconception that arises from the landlord appointing the agent and paying the agent’s fees but this narrow view ignores the position of the tenant as the customer in the supply chain. The traditionally accurate negative stereotype is of letting agencies maximising landlords’ profit by doing the minimum the law required for the people whose homes they were responsible for, their tenants. It’s not hard to see why people don’t trust letting agents! The old-school, exploitative way of treating landlords and tenants completely differently could not be more flawed and short-sighted (I’ll steer away from the obvious moral argument).
Sadly, this stereotypical approach still prevails today across much of the private rented sector. At this year’s biggest annual industry conference in London, the voluntary regulator announced to a room of 1,200 cheering letting agents that the tenant fee ban in England could be taken as confirmation that tenants are not customers of letting agents (because letting agencies in England will no longer be allowed to charge tenants fees – this is already illegal in Scotland). This unsound view of the sector and the landlord, tenant & letting agent relationship is common, but it does not reflect all letting agencies.
It’s clear that tenants are the customer in the rental relationship and with the proliferation of online reviews, the agencies who take the “tenant as a customer” approach are easy to differentiate from those that don’t. This is having a significant impact on the strength and growth of different letting agencies for one simple reason; most landlords understand the tenant is a customer better than their letting agent does.
Landlords see tenants as customers
When new landlords choose a letting agent to manage their property, they are guided by the huge numbers of tenant reviews more than they are by the lower number of landlord testimonials. This year, most new landlords will have chosen their letting agency based on a strong tenant approach and service record.
Change is happening
Due to the slow-moving nature of the letting agency market and the low levels of churn (very few landlords change letting agency), the market is taking time to change but change is happening. The letting agencies who view tenants as customers are growing whereas the agencies who continue to take the one-sided, exploitative approach are not. Letting agencies who continue to treat tenants as second-class citizens will have to adapt their approach or they will find it difficult to survive in the changing market.
Build-to-Rent will accelerate change
Build-to-Rent will bring another significant change to the private rented sector. Large corporates are creating purpose-built rental accommodation blocks all over the country. In this model, the service level tenants receive as part of their rental payment is an important part of the business model. In the majority of Build to Rent developments (ignoring ‘affordable Build-to-Rent’), the tenant is paying a higher rent for the service that comes with the accommodation. As Build-to-Rent becomes a bigger part of the private rented sector, the service delivered to tenants and the power of the tenant voice will have never been more important.