A prominent PropTech company chief has repeated his claim that old-fashioned methods of business administration could be prohibiting letting agents from growing their businesses.
According to the Fixflo Report 2017 - a leading measure of the private rental industry's activities - over 10 per cent of letting agents still use spreadsheets to manage repairs. And these firms are over 10 times more worried about their ability to take on additional landlord clients than those using specialist software.
"Frankly, I am not surprised to hear that agents using spreadsheets to manage repairs are vastly less confident in their ability to grow their lettings book," says Neil Cobbold, chief operating officer of automated payment platform PayProp.
"In our experience, the same attitude prevails among firms who practise manual reconciliation and banking processes, utilising other systems as well as spreadsheets.
Handling these important processes manually increases the chances of human error and takes considerably more time, so it’s understandable if these agents are less confident about taking on new instructions," he adds.
Fixflo's study involved almost 400 lettings professionals and also found that the impending ban on upfront fees charged to tenants remains the biggest worry among the letting agent community. Over 40 per cent of property professionals answering the survey said that the prospect of a fees ban is the biggest worry.
The next most prominent worry cited by agents was a lack of new landlords and instructions.
But agents need not worry too much about fees, says Cobbold: “Digitising certain everyday processes such as the reporting of repairs and management of payments could help to save agents time and help them grow more efficiently.”
Cobbold says PayProp agents typically grow their lettings portfolios by 23 per cent annually – without increasing their cost base. Other data suggests that the average UK agency earns commission of 10% and operates at a profit margin of 12 per cent to 16 per cent.
Since launching in 2015 the firm now services over 200 agents.
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When you consider the demographic and variety of agents, having only 10% using spreadsheets is actually quite good. It was only 8 years ago that a total of 6000 lettings and managing agents were registered, with the total offering these services, now in the region of 22,000 that's some 70% of agents who are relatively new to this and are building portfolios from scratch. If only 10% are using spreadsheets for just part of their operations, then that's easily attributable to those just starting and looking at huge pressures on profit, established agents who have "always done it that way" and are super successful anyway and a proportion who will just never care that much to invest.
In the end “technology” will not gain an instruction, being visible will give the you the chance to try and gain it face to face and I would suggest that collaboration and offering an online presence (even if it’s never used) would be higher priorities in achieving “facetime”.
Any approach to "taking on new instructions" must be culturally holistic, goal driven, focused and take into account the seismic shifts in the market.
There is no silver bullet and payment processing is just a small part of that roadmap to success. But that's just my opinion after 30 years and seeing this all before.
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