Is this the top way to increase your property management fee in 2022?
There is one simple reason behind why Goodlord has seen some agents increase their management fee by 2% on average, and that's a strong rent protection service offered as part of their property management package.
Agents bring value to landlords. They can help them to save time, shoulder the burden of compliance, and bring their expertise to the table across the board to help landlords reduce void periods. That's a simple fact. That doesn't make conversations around increasing management fees any easier to have - but there's one thing that can often make landlords jump at the chance to pay more for your service: including rent protection in your offering.
The popularity of rent protection has grown in leaps and bounds since the start of 2020. Rather than simply being an add-on that sets an agency apart from its competition, many agencies now consider it essential to their managed proposition. Landlords are starting to understand its value too, without the need to be as strongly educated on how it works and how it can help. However, there are certain steps that your agency can take to make it a no-brainer for landlords to accept a higher management fee for a package that includes rent protection.
Choose the right service
First, a pretty obvious suggestion but worth stating. You need to take the time to find a rent protection service that will best fit your customers. That involves looking into the policy wording, making sure it ticks all the boxes and that you fully understand the benefits of it, so you can explain it to your landlords - from the cover available, what happens after vacant possession, when payments will be made, and so on. You can read our guide about what the policy wording for rent protection actually means, to help you choose.
Go all out on marketing
Once you've chosen the right rent protection service to offer, you should then include it in your marketing, to demonstrate the real value-add for your landlords - both current and potential. Some providers, like Goodlord, can share assets to help you promote the service to your landlords. Good marketers can lean on messaging around how you go the extra mile to support your landlords and their investment, which can help attract new landlords to your business.
Increase your management fee
Next step - ensure that your property management fee reflects the extra service that you're offering your landlords, so you can benefit financially. The policy is normally taken out in the letting agent's name, with the agent ensuring the claim is submitted and tracked accordingly - a bit of work for your agency, which you can charge for accordingly in your fee.
This then circles back to choosing the right policy. Goodlord's Rent Protection and Legal Expenses Insurance has an automated claims process, mediation included, and legal expenses covered too, for example, which makes it a simple process for agents to submit a claim and be supported through the whole process.*
Upsell at the right time
Timing is also key. Tenancies with new landlords can easily benefit from rent protection, if they meet the relevant criteria, as you can offer a full package including rent protection from the beginning. But did you know that you can also offer protection on tenancies mid-term, with some providers? That means that you can offer it to landlords at any time during a tenancy, assuming they're eligible - meaning that you don't have to wait until the tenancy ends to upsell them onto this extra service.
You can also offer the service to the whole of your current landlord portfolio. When upselling your landlords onto a package that includes rent protection, you should plan it far in advance of the actual negotiation period, through a series of communications to ensure they're aware of your planned changes, giving them the option to opt out in advance if they so wish. You can create email templates, to make sure you have a steady cadence of communications around any changes to their fee that you make, to help persuade them of the benefits of the more comprehensive package.
*Terms and conditions apply, always read the policy wording. FP157