Finances have never been more stretched in the UK, with almost every bill and expense soaring for employees and employers alike. Many people are simply not being offered pay rises to absorb some of the additional costs. Monthly household outgoings – looking at the essentials like utilities, council tax and insurances – are now estimated to be £2,500 for those with mortgages and £3,000 for private renters.
Covering these bills (without taking into account the need to save, or any unexpected or ad hoc costs) requires an annual salary, before tax, of £38,000 and £47,000 respectively.
Parents will need even more to cover childcare costs (a part-time nursery place now costs over £7,000) and none of those estimates include "luxuries" like day trips, meals out, holidays or spending on hobbies and exercise.
Put simply, higher wages are desperately needed to help staff cover all of their living expenses.
For many letting agency owners, being able to offer higher salaries seems like a pipe dream. Costs for businesses have risen too. It may feel illogical to voluntarily increase staff costs when so many other outgoings are on the up, and the lettings market is especially challenging.
Yet let’s look at the reality. When I searched through the adverts for residential lettings property manager vacancies on a popular job listings site recently, 21% of the 250 jobs which fit this description were offering a salary of between £20,000 and £25,000.
A further 27% offered upwards of £25,000, and 34% were paying more than £30,000. Just 8% were advertised at £35,000+ and a further 10% at more than £40,000.
If we accept that this reflects the general salary offerings in the industry in 2023, fewer than one in five property managers are being paid enough to cover all of their essential outgoings without living with someone who also works.
Few jobs are easy, but the swathe of challenges thrown at the property sector in recent years have only added to the workload of the average property manager.
With many more changes likely to happen in the coming months and years, we must all act now to retain existing talent within the industry, and attract those with the right aptitude and attitude into a career in lettings.
Because annual turnover in the industry is almost 30% and the most common reason given for leaving is – you guessed it – to find a higher paid role. You might find replacements, but the average cost of hiring a new staff member sits at around £3,000.
There are also training costs - which will become even more vital once the Regulation of Property Agents is in place - and either you or your team will be spending time on advertising, interviewing, and onboarding rather than activities which generate additional revenue for the agency.
Increasing your revenue as much as possible is, of course, the long-term solution to the problem. And to do that, you’ll need to be looking at offering additional services, bringing on board new landlords, converting more from let-only to fully-managed, and introducing effective sales funnels.
But the very first thing you can do, which is much more immediate, is to sit down and review exactly what you’re charging for each of your services. Are you still doing certain tasks for free, thinking the odd hour or two won’t make a big impact?
If so, count up the total amount of time spent on these activities and then you’ll see exactly how many hours (and ultimately how much income) you’re losing across your team each year.
How long has it been since you last reviewed your pricing structure and, if it’s been a while, have your costs fallen below industry average?
Once you’ve looked at your charges for all activities undertaken, how long your team spend on these activities, and broken down their annual salary into an hourly costing to the agency, then it becomes easier to see if you’re valuing your services highly enough.
You may feel lower costs will help you attract more clients, but in reality you’re devaluing what your agency offers, the expertise and time that goes into providing an excellent service, and ultimately you’re devaluing your staff because you’re not then making enough revenue to be able to consider paying them what they’re truly worth.
And if you can redress this balance, it becomes an upward spiral: the agency earns more, you can pay your staff more, they stay for longer and become more knowledgeable and more experienced, and then they can support you to grow the agency, which then helps you earn more…and so on.
Learn how Goodlord's online platform helped Charles David Casson save on staffing costs.