- Like The Wizard of Oz, the lettings industry is facing many financial challenges.
- The old lettings agency model was all about the agency acting as an intermediary between landlord and tenant.
- As of June 2019, the balance of power will move towards the tenant as tenant's fees are removed through the Tenant Fees Bill.
- With this new model, lettings agencies are focused on helping happy customers to find a place to hang their hat at the end of a long, hard day.
This year the classic Wizard of Oz film came back to our cinema screens, celebrating its 80th birthday. Once again, we heard Dorothy sing about Somewhere Over the Rainbow, a song about, a happy, hopeful place where dreams come true.
What most people don’t realise is that this iconic piece of Hollywood history was actually a nightmare to produce as well as one of the most expensive movies to date. It didn’t make a profit until 10 years after its first release, with half the cast sustaining injuries during its production.
Like The Wizard of Oz, the lettings industry is facing many financial challenges. If it doesn’t address these, there may be casualties, as this blog explains.
So, let’s look beyond the present model to a new model, where the right productivity mindset, insights, and actions will turn struggling lettings agents into the rewarding businesses they’d love to be : a place where their clients feel at home.
The Old Lettings Agency Model
The old model was all about the agency acting as an intermediary between landlord and tenant. They’d focus most of their attention on the landlord, collecting a fee from the tenant (in the case of fully managed services) as well as charging the landlord a commission.
The New Lettings Agency Model
As of June 2019, the balance of power will move away from the lettings agencies and landlords towards the tenant, as tenants’ fees are removed through the Tenant Fees Bill. This will wipe out up to 20% of revenue for estate and lettings agents, forcing them to think differently about where they earn their revenues to guarantee longevity.
Clearly, the old lettings agency model is broken. Instead of barely surviving, lettings agencies would thrive if they adopted a more customer-focused model. Here, they would act as the landlord, growing their business through additional income-generating services such as added-value property and asset management advice to client investors (previously landlords) and benefits like ironing, cleaning and discounted gym memberships to tenant customers (previously tenants).
Taking inspiration from the famous Wizard of Oz story, here are five lessons for improving lettings agency efficiency through this better business model.
Bring on the yellow brick road: 5 ways to create a highly profitable lettings agency
- Every road comes to an end. Clearly, the old lettings model is flawed and could lead to a dead end. By providing added value services, agents will keep their esteemed tenant clients loyal and happy while catering to landlord investors who gain higher yields on the properties they rent.
- Use brains, heart and courage. In the Wizard of Oz, the scarecrow, tin man and lion represent the brains, heart and courage, which triumph over adversity. If lettings agents are to weather the storm caused by legislation such as the Tenant Fees Bill, they need a different mentality which ensures that all their agents are coached on and rewarded for a new set of behaviours which are focused purely on keeping all stakeholders happy. According to Stewart Simpson, Sales Director of Simpson, Google client reviews are not about fees but rather are “about how they felt about the whole experience and [whether] they trusted us.”
- Every success story needs a hero. As Dorothy was in the Wizard of Oz, the tenant is the new hero. If they’re placed at the core of a new business model, they’ll stay longer, pay higher rents and recommend the lettings agency to other tenants. The agency, in the role of the supporting characters, will gain a strong reputation for the value they bring to client investors and tenant customers and be seen as a key part of their success story.
- There’s no place like home. With this new model, lettings agencies no longer act like “professional” matchmakers between people and properties and viewing it as parts of a process. Instead, they’re focused on helping happy customers to find a place to hang their hat at the end of a long, hard day. After all, as Dorothy said when she clicked together the heels of her ruby red slippers, “There’s no place like home.”
- Every story needs a happy ending. The iconic Wizard of Oz story had a defined beginning, middle and ending. This is where they differ from exceptional lettings agencies, which are continuously improving their never-ending success story.
THE END…or is it? Every good story has a moral, and this one’s no different. Ding, dong, the witch is dead – and so is the old model of running a lettings agency.
On the Wizard of Oz’s 80th birthday, with a new business model, exceptional lettings businesses can be created one behaviour at a time. Somewhere over the rainbow, productivity dreams can come true. And lettings agencies, tenants and landlords can live happy ever after... and we can help.