“Property management is now becoming a much more integral part of our offering,” says Greg Tsuman, Lettings Director at Martyn Gerrard, an award winning estate and letting agency operating across North London. “About two years ago, 75% of our portfolio was let-only landlords - then we decided that we were going to phase out the let-only service.”
The decision was made well before the pandemic, in line with the Tenant Fees Act, which disrupted Martyn Gerrard less than other agencies and offered it an opportunity to evolve. “Our business model has always been to be transparent and charge landlords over tenants, because you can't have two clients, you've got a client and customer,” says Greg. “But the Act still pushed us to reinvent ourselves.”
Having such a large percentage of their portfolio in the let-only segment meant that transitioning them all into a different, more expensive service wasn’t easy, says Greg. “It was a very strange and scary decision to make.”
The new offering
Martyn Gerrard successfully simplified its offering around three options: let only (at a higher price bracket), rent collection, and full management. “We've converted pretty much everyone, unless they're a big developer with their own management department in house. Everyone now uses either the full management or a part-managed service.”
This property management structure helped to balance the losses from the Tenant Fees Act, without compromising on the service offered to clients. The agency had to find a way to demonstrate the value that the landlords were getting, to justify the extra fee.
“We included rent guarantee in our property management service, so we could offset the money we were previously getting from tenants. Using rent protection was never a profit making exercise for us and our clients understood that. The added value to our clients clearly outweighed the marginal fee increase.”
Restructured payments for long-term cash flow
The prioritisation of a fully-managed service also changed the way Martyn Gerrard’s fee payments were structured. “We're offering our landlords to spread fees monthly,” says Greg. “All fees, not just the management side, so it's essentially a 0% interest offering with any managed service.”
Initially, this posed a cash flow challenge, but the new approach meant that they had a continuous flow of income throughout the pandemic, rather than depending on the one-off payments received previously on let-only services.
“During the pandemic, having property management in place gave us breathing space because we were still receiving income from the business already generated.”
In this situation, rent protection also has the advantage of guaranteeing their landlords’ incomes - ensuring the agency’s landlords can continue to pay Martyn Gerrard.
“Rent protection allowed us to continue receiving those fees. Even if tenants were not paying the rent for whatever reason, it allowed our landlords a little bit more peace of mind.”
