Lockdown forced the entire lettings industry (along with the rest of the world) into digital transformation and the “momentum behind digital-experience adoption is unlikely to reverse,” suggests the Harvard Business Review, while McKinsey notes that “there could be lasting changes to consumer attitudes towards physical distance [making it] possible to imagine a world of business—from the factory floor to the individual consumer—in which human contact is minimised.”

This article was originally published on 15 June 2020. Although we endeavour to keep our coronavirus (COVID-19) content as up to date as possible, the situation is rapidly changing, so please ensure you refer to gov.uk for the latest advice and information.

Think about some of the biggest companies in the world. Who comes to mind? Probably Apple, Amazon, Facebook, Google, and Microsoft. What do they have in common?

Sixty percent of agencies’ leads are received outside of standard office hours - and agencies who don’t respond to enquiries immediately could risk losing out on potential tenants, says the founder of an AI-powered virtual assistant for agents.

Online agencies are now considered by many to be the biggest rival of the traditional high street lettings business. Love them or loathe them, there’s no denying there are some things that online agencies do very well - from their around-the-clock availability to clever branding that resonates with their audience - and progressive High Street agencies are beginning to adopt some of these strategies to get an edge on their online competition. 

Open banking is set to dramatically improve the referencing and payment processes for letting agents by removing the traditional barriers to accessing financial data. Under the Second Payment Services Directive (PSD2), banks are required to make their payments infrastructure and customer data open to third party providers, which will give referencing providers near-instant access to more detailed information on tenants’ financial position than ever before and make paying by bank transfer as easy as paying by credit card.

“Tenants want convenience,” says Lizzie Stevens, Director of Market Rent at Folio London, the private rent arm of Notting Hill Genesis, a housing association.  “We live in a day and age where people can tweet about something to get what they want instantly. It’s very much an ‘I want it now’ environment and we have to keep up with that - making sure we’re keeping tenants happy and meeting their expectations. Everything is going online and moving towards a self-service way of doing things.”

Generation Rent expects a digital-first experience from every single business or service they interact with - which includes letting agencies. Meeting this group’s expectations is going to be crucial for letting agents in a rapidly changing and increasingly competitive environment. Agencies are expected to lose up to 20% of their revenue and will need to look for new revenue streams to plug the gap, which means selling products and services to their tenants will be necessary to survive.

The lettings industry continues to face both huge change and opportunity. The Tenant Fee Ban is going to put unprecedented pressure on letting agencies and we predict PropTech will play an increasingly important role for many agents, from streamlining the pre-referencing process to using virtual reality to show prospective tenants their future homes.

The ultimate goal of the online agency is scale. It’s a risky play, but it can also be a rewarding one, which is why every single online agency makes the same bet. Sometimes the bet wins and sometimes it doesn’t. But, despite recent headlines claiming otherwise, it doesn’t mean that the business model of the online agency is totally flawed.