Letting agents: Landlords identify an ideal model
Introduction
One key topic of the 2022 Quarter 2 consultation was to look at the landlord experience of using local letting agencies and managing agencies. The consultation also attempted to find out more about the experience of landlords who use online agents. Is the experience and customer satisfaction of landlords who use online agents much different to the experience of landlords who use a traditional letting agent?
To collect evidence, landlords were asked questions on:
- Their use of landlords either a local letting agent or an online agent (or whether they choose to self-manage).
- Their satisfaction with the service provider.
- What are the essential services an online agent should offer.
- When and why landlords decide to switch or stop using an agent.
What proportion of landlords choose to use an agent?
Online agents such as Open Rent or PurpleBricks provide an alternative to traditional high street agents. The services on offer are essentially the same offered by traditional agents, ranging from tenant-find to fully managed service.
Even with the proliferation of online agencies, most landlords in the survey – over three-quarters (76%) – have never used an online agent.
- Only 15% of all landlords surveyed currently use an online service.
- A further 8% have used one in the past but no longer do so.
Services of online agents deemed ‘essential’ by landlords.
The 23% of landlords currently use or have used an online agent in the past, were asked what they deem as "essential services" online agents should offer.
The chart below shows how landlords responded.
Chart 1: Landlord views on essential services (online)
The chart shows most of the services deemed 'essential' by surveyed landlords can be grouped into two categories: (i) setting up a tenancy; or (ii) ensuring a landlord is legally compliant - which includes serving notices.
In fact, the top five most demanded services offered by online agents, according to respondents, all involve setting up a tenancy. This suggests that finding a suitable tenant and establishing a tenancy is a significant part of the offering of online agents.
Services that help ensure landlords remain legally compliant were the next biggest grouping of essential services for landlords:
- Ensuring that you as a landlord have met all legal requirements (65% of users of online agents cited this as an essential service)
- Managing the legal process to be essential (45%)
- Serving notices as essential (47%)
Why would a landlord consider switching letting agents?
The survey found that 50% of landlords had recently switched letting agents. This group of landlords were asked to share the influences on that decision:
- The most common reason for switching was dissatisfaction with the time taken to respond to requests
- This was cited as a reason by 38% of landlords who switched agents.
Another common reason was the landlord’s belief that their agent’s fees were too high:
- Over a quarter (26%) of landlords referenced this.
- A further 16% of landlords decided to switch because a competitor local agent promised a better deal.
Why do landlords stop using or switch online agents?
Landlords who have used an online agent were asked what prompted them to stop using the online provider. The top two reasons for deciding to stop using an online agent referred to:
(i) Poor customer service - 22% of landlords stated that the customer service is not there with an on-line service.
(ii) What landlords perceived as a lack of personal touch – 21% of landlords reported they prefer people to platforms.
Only a handful of landlords stated they were offered “good deal from a traditional provider” or “high costs” as their reason for stopping their online service.
Summary
Key points from the research shows:
Firstly, most landlords surveyed, whether they use online or local agents, are content with their current agent:
- For online agents, 74% of landlords stated they were “Moderately” or “Extremely satisfied” compared to 71% of landlords who use local letting agents.
Next: the use of online agents is not yet common practice, even among those landlords who choose to use a letting agent.
Finally, many landlords who use online agents view their primary role as sourcing new tenants and setting up the tenancy. Once this function has been fulfilled, landlords cease to require any further services an online agent can offer them.
For example, when asked what the essential services an online agent should offer, the top five responses all involved setting up a tenancy:
- Referencing (92% of users of online agents cited this as an essential service)
- Credit checks (88%)
- Sourcing tenants (80%)
- Right to rent checks (73%)
- Performing viewings (65%)
When it comes to switching agents, the research findings reveal key differences in what prompts landlords to either switch agents or (in the case of online agents), stop using them at all.
Ultimately – cost and landlord satisfaction with the service provider (itself a personal metric)– indicate that value for money across these two factors is the key determinant which prompts landlords to consider a switch.
The data does suggest that landlords who opted to switch away from traditional agents were motivated more by cost-based considerations than those who decided to stop using an online agent. For landlords who stopped using an online service, reasons cited tended to refer to an association between online service providers and a “lack of personal service”: some landlords simply prefer the personal touch and physical presence of local letting agents.
(It should be noted given the number of responses, that some of these findings are indicative.)
However, the evidence suggests that for many landlords, an ideal service would be one which offered the convenience and low cost of an online service and the availability of a helpdesk offering a customer focused experience - providing expertise and guidance where necessary.
