Ferndown Estates recently caught our attention when we heard of their bold model to proactively stop charging tenant fees altogether in the summer of 2017 - way in advance of the expected arrival of the Tenant Fee Ban in spring 2019.
Located in Birmingham, Ferndown Estates is an independent family-run agency that has been focused on providing a premium and customer centric service to landlords and tenants since 2003. We recently spoke to sales director Ian Crampton, who explained the reasoning behind Ferndown’s decision to ditch tenant fees early.
With a background in the financial advisory market, Ian was able to see two big clues suggesting that change was on the horizon:
- Legislation banning tenant fees was already implemented in Scotland,
- The charging of tenant fees had always been an unregulated activity
Predicting the restrictions to tenant fees may have been the easy bit, but working out how to plug the hole of lost revenue is where things got interesting. Ian set to work on developing and rolling out a two year plan that would replenish the agency’s lost revenue from the Tenant Fee Ban and position the business for long term success.
For two years, Ferndown Estates slowly increased rental income, reduced tenant fees, invested in technology and ultimately, was able to then provide a better service to both tenants and landlords. Ian believed if they didn’t make these changes, their business would be in jeopardy. Furthermore, when asked what advice he had for other agents in regards to the tenant fee ban, he said "You have to come up with a way of surviving. There will be reams of agencies who will lose their business".
What has resulted from this bold decision?
Better tenants, and happier landlords
With word spreading of no tenant fees and an increase in positive online reviews, Ferndown Estates now sees more tenants than ever before. With multiple tenants to choose from when a new property comes onboard, they can take the necessary time to find the right tenant for the right property. By spending the added time upfront, Ian states there is low churn and less work in the long run, not to mention landlords being happier with responsible, quality tenants treating their property as a home.
Crampton believes that tenants make just as important customers as landlords, and it’s vital to provide them with the same, top level service. The team at Ferndown Estates invests time in providing marketing materials to inform and educate tenants on how to upkeep properties and their responsibilities as a tenant, as well as giving them a prompt service on any issues involved in the property throughout their tenancy. The great service Ferndown Estates provides can be seen by the increase in the number of quality tenants arriving at the agency by word of mouth referrals and the continuous submissions of positive online reviews.
Top quality landlords referring other landlords
As the business gains popularity Ferndown Estates has the luxury to only work with good landlords and good tenants who are aligned with the business values. Crampton attributes this success to their priority of placing the right tenant with the right landlord and not rushing the placement just to fill the property.
Just as they provide additional value to the tenants, Ferndown Estates provides marketing material to landlords to educate and inform them on how to improve their properties to ensure they keep their long term tenants happy. They also hold an annual landlord show, creating a community of top quality landlords that value the services of Ferndown Estates.
With their focus on building strong relationships with all stakeholders, they no longer have to spend as much time prospecting for new landlords - they are being referred to their business organically. Additionally, they now have the luxury of allocating the time previously spent on prospecting to instead managing the property, building relationships and providing more value to their customers.
A sustainable business
Ferndown Estates knew they needed to put technology at the core of their business to not only combat the tenant fee ban but to be operationally more efficient. They explored technology platforms that would help streamline their business; reducing their costs and providing a smoother process. Additionally, the convenience and simplicity of platforms such as Goodlord has helped allow Ferndown Estates to charge for a premium service.
Overall, the early end to tenant fees at Ferndown Estates has provided the agency with the opportunity to attract more tenants and more landlords. However, it is less about the number of new landlords and tenants Ferndown Estates has seen over the last two years, but the overall quality of them that has made the most impact on the business.
Ferndown Estates saw the Tenant Fee Ban as an opportunity to improve and future-proof their business, and to proactively get a head start. Banning tenant fees doesn’t need to be a negative topic or to be dealt with at a later date. How is your agency handling the Tenant Fee Ban and the potential loss of revenue to come from it? We’d love to hear from you.