RESIDENTIALlettings
Ninety per cent of her clients choose a full solution. At ARPM, the percentage is, currently,
lower; Simon Duce says about 60 per cent of agents take the full service, while others are outsourcing single processes, such as rent collection, or renewals. Outsourcing renewals, he says, is particularly popular; “Agents really hate collecting renewal monies, as they think it will prejudice the relationship, and we see some agents who have let those debts remain uncollected for months.” Some agents also use ARPM to offer an overflow work service. “We don’t offer a one-size-fits-all service,” Duce says, “because every agent is different.”
Agencies find it a struggle to grow because they lack the resources.’
ARLA trained back-office support team, is a winning combination – time and again.” Jenny Markham agrees, saying that she
SIMON DUCE ARPM
I recognised a growing need in the
business for really good back end support and we went on from there.”
Outsourcing has been particularly
popular with smaller agents; ARPM’s average client has 50 to 75 properties in the portfolio. Simon Duce says that
often, agencies find it a struggle to grow because they don’t have the resources. “Sales agents moving into lettings is a
market that’s growing,” he says, “but it’s only about 15 per cent of our business. Mixed practice is the core of our business, and particularly practices which are stronger on the sales side and whose lettings sides are relatively weak.” That experience seems to be common
for outsourcers. Rushbrook & Rathbone, whose legal administration and property management services to letting agents, private and corporate landlords span over twenty years, set out an alternative stall for residential sales agencies considering setting up a lettings service. As one would expect, the response has closely followed the market pattern – a tight sales climate certainly fuels the desire to become successful in lettings! “In our experience,” says Sarah
Rushbrook, “the partnership of a determined sales (or lettings) negotiator with a guaranteed professional
56 JANUARY 2011 PROPERTYdrum
sees a lot of business from start-up letting agencies, as well as from sales agencies setting up a lettings side, owner-managed businesses for the most part. She believes small business owners,
because of their entrepreneurial nature, are particularly likely to use outsourcing. “People set up a small business so they can do the sales job,” she says, “not so they can get into the detail of lease agreements and bill payments.” A large number of sales agencies are
getting into the lettings business in order to provide themselves with recurring income. Some businesses only survived in the market trough of 2007-8 because they had lettings revenues coming in, and that fact has made many agencies re-evaluate the attractions of the lettings business.
However, the lettings business is far more complex in terms of its continuing responsibilities, and in terms of regulation, than sales agency, and without the experience or expertise to staff a fully functional back office, such agents are choosing to outsource. Simon Duce says that’s delivering good
business to outsourcers, but there is a fly in the ointment. Greater competition has been driving agents’ fees down, “to the extent that some of them have such thin margins they can’t afford to outsource,” Simon explains. He also believes larger businesses will
increasingly become attracted to outsourcing. “Once they manage so many hundred properties, compared to direct costs, we’ll be more expensive than doing the work in-house,” he says. However, the indirect costs of training and managing back office staff also need to be taken into account; and once this has been done, he says, “outsourcing is a credible option for the larger group too.” Technology is key to making the
The main motive behind business process outsourcing is to allow a company to invest more time, money and resources in core active items.’
SARAH RUSHBROOK RUSHBROOK AND RAtHBONE
outsourced service work. The Letting Bureau has its own software, Lettings Genie, which links clients’ systems to the bureau, while ARPM uses the well-known Gemini software from VTUK. Automating much of the data traffic is vital to making the economics of outsourcing stack up. Such technology can also help agencies keep in touch; Rushbrook & Rathbone provides a secure web-based Portal which interacts with their management software, CFP’s Winman, enabling agents, landlords, tenants and contractors direct access to progress of tenancy offers, works and all relevant documentation relating to their property portfolio, twenty four- seven. Simon Duce, “Our business is about processes. Lettings is a process-driven
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