Why charging landlords an all-inclusive fee means your agency will have to up its game [+ podcast]
Settio Property Experience sets itself apart from the competition by charging its landlords an all-inclusive fee, writes co-founder Samuel Fitz-Hugh. He thinks more agencies are set to follow this approach, but warns it will be hard work.
We don't charge our landlords a letting fee. Or an inventory fee. Or a referencing fee. Or any extra fees at all. That's because we've chosen to set Settio Property Experience apart by offering our landlords an all-inclusive management fee instead, simplifying the landlord experience. It doesn't matter if the client requests an extra inspection or anything else - absolutely everything is covered by their managed fees.
A new approach to property management
It's a unique approach to managing property and one that sometimes takes even our newer landlords, who are used to more traditional models, a while to get their heads around. They're not used to receiving their Electrical Installation Condition Report or a property inspection update without an extra charge attached. But, with the majority of our landlords based in Asia, it's an approach that can provide them greater peace of mind because absolutely everything will always be taken care of in a timely manner. An all-inclusive fee doesn't just make life easier for our landlords - it makes it easier for our team, too: we don't need to worry about chasing fees all the time, we just get on and do it.
The success of our approach is something that's been borne out by the referrals that have helped us grow our business since we started four years ago, which has seen us add a London outpost to our Manchester base this year.
The importance of tenant retention
Although charging landlords an all-inclusive fee is relatively rare at the moment, I can see more agencies experimenting with this model in the next few years, because of the benefits it brings to not only landlords but to your business. However, I think it can be a tricky business model to get right for some agencies, because it also relies on long-term tenant retention. If we had a tenancy changing every six months, for example, we wouldn't be making any profit on that property. We would be paying for check-ins, check-outs, inventories, professional cleaning, and so on constantly. In an all-inclusive model, this means that we would lose out financially.
It's imperative, then, that we ensure we have the best quality tenant on the best type of contract we can - our average tenancy length is closer to two years - and have heavily invested in keeping those tenants happy and staying in the property. Our approach here, too, is non-traditional - we reach out to our tenants regularly. Not because there's a problem, but to find out how they're going. We want to make sure that our tenants are always happy and, if not, why? Is there something we can do to change that?
The level of attention and care we provide to our tenants as well as our landlords demonstrates the level of dedication it takes to make this business model work. If all-inclusive fees do become more popular in the lettings industry, I think it will become apparent very fast which types of tenancies make the business a viable and profitable one.
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