How times have changed – Why Lettings and Property Management is now King in an agency business.

When me and Matthew Baldock first got into Estate Agency back in the late 90’s/Early 2000’s the make up of Estate Agency businesses looked very different to today. We were working for a large national corporate agency in Chelmsford and when you took a walk around the Estate Agents office is was not unusual to find agents who were sales only or even lettings only agents. The two businesses were rarely mixed. The branch we worked in did have a lettings business, but the sales and lettings businesses were two separate businesses with no relationship between the two. And you would usually find that the lettings departments were squirreled away upstairs or at the back of the office and given a smaller share of the window display if any.

So many opportunities for cross selling must have been missed with no referrals going between departments for a property that wasn’t selling to be let or for a buy to let property being sold to be referred to the lettings department for management etc. Today that seems crazy!

Fast forward to today and it’s rare to find an Estate Agent who doesn’t do lettings and to some extent vice versa. It is even notable how many agents now describe themselves as Lettings and Estate Agents rather than the other way round because they are recognising that Lettings is no longer the poor relation and actually the foundation of any Estate Agency business.

When we set up Charles David Casson we realised the value in Lettings and Property Management from the start. Having had some time away from the Estate Agency industry in the security industry I was used to dealing in contracts and not one-off transactions. Every time I signed a client, I knew I was adding X amount of turnover to the company and Y amount of profit. And I have brought this experience with me when I returned to set up our Lettings and Estate Agency business. Matt Baldock will often tell our consultancy clients how even he took some convincing on why we should invest heavily in the lettings and property management side of the business. Being a die hard Sales Agent it took some time but now Matt is heavily involved in the lettings side of our business and is a convert!

Estate Agency should be looked at as a simple business model really. If you can grow a lettings and property management business so that this covers the overheads of the business then you will become less reliant on the sales business and this will mean sales income becomes bonuses and increased profits. Especially given current challenges with COVID-19 agents should be realising that it is more important than ever to have an income stream which is recurring revenue to see you through the hard times. Building a lettings and property management business also adds value to your company. The sales side of an estate agency business does not hold much value-it’s really only worth a portion of the pipeline plus a little bit of goodwill depending on the brand. However, a well-structured Letting and Property Management business has contract value and therefore a value as an asset that you can sell in the future. And there are lots of ways to ensure you are building a saleable asset from the start on that side of the business which I will save for another article.

Looking back to our days as sales only agents we now joke about how when a landlord would walk into the office, we would all just say, “lettings is upstairs” and carry on with our business. Nowadays if a landlord walks in or calls in we roll out the red carpet.

So, I believe many agents will now want to grow the lettings and property management side of their business or if they don’t have that element currently in their business then they will look to build it. Lettings is no longer the poor relation to an agency business but the foundation and the necessary income stream for survival. Note how I refer to it as Lettings AND Property Management as the Property Management side of the business is what keeps the revenue coming in. Of course if you have never done Property Management or you simply want to concentrate on driving revenue and upfront business then there are ways in which you can outsource Property Management and there is plenty of Proptech and software that can drive efficiencies and compliance within a complicated sector. All of that is something that Matt and I can and do help clients with.

So rather than lettings departments being squirreled away at the back of offices or hidden away upstairs they are now kings in the estate agency business and should be treated with at least equal importance and are becoming the forefront of many estate agency businesses across the country.