A letting agent who was concerned at the enormous impact of the fees ban on his own business has successfully recruited its first 1,000 customers after entering the tenancy referencing market last year.
Simon Tillyer, of family-run Shefflets in Sheffield, says his own busy agency will lose £100,000 a year in revenue as a direct result of the ban.
That equates to about 15% of its former income.
Some 14 months ago he and his wife set up Vouch, which charges just £5 plus VAT for a full tenant reference.
Tillyer said: “Our agency has been going about 12 years and during that time we have tried just about everything. We have used specialist referencing firms and brought it in-house.
“Our solution was to set up our own system for our own agency, and this worked very well. When we saw the tenancy fees ban looming, we could see a business opportunity and we ramped up the technology.”
He says that the referencing can be done so cheaply because the process is highly automated, getting tenants to do much of the work and upload documents such as bank statements.
Unlike other referencing systems, Vouch gives the agents themselves the final decision whether to accept or refuse a tenant.
The business, which does not use a call centre, has so far recruited about 1,000 agency brands and both Tillyer and his wife now work in it full-time.
He says that the cheapness of the referencing is important: “It’s a cost that doesn’t even necessarily need to be passed on to the landlord – the agent can swallow it.”
He points out that it isn’t always possible for an agent simply to hike its fees to landlords, with pressure from competitors who haven’t put up their rates.
The business has also teamed up with other providers – for example, deposit replacement, insurance and utilities switching services – which pay referral fees.
Agents can access these at the touch of a button, to earn commissions.
Tillyer emphasises that his business is not the whole answer to income lost from the tenant fees ban – “because there isn’t a whole answer”.
Comments (18)
I can honestly say my checks are more accurate, I’ve used 3rd party referencing and some of the well known ones who have provided duff info. I myself rented a property whilst renovating my current home, I completed the referencing companies application paid the agent and when I was back at work got a phone call from the referencing company wanting to confirm my income when I explained I was the director and could tell them anything they just accepted my word for it. Great these 3rd parties companies take your money and won’t guarantee the results, the responsibility lies with the agent. So you may as well do it your self it’s not rocket science.
It sounds like you’ve had a bad experience with that particular referencing firm – they should be validating the company, who you were. Checking any docs for inconsistencies and then also checking IP addresses that references came from (to check it wasn’t the same PC providing the info etc), along with CIFAS checking and so many other things.
That’s the deal really – some referencing companies go deep into the referencing, give a proper service with a “real” look at the tenant, properly check the detail and some don’t.
For the tone of this post I’ll let you decide which type of reference one that costs £5 will be………………
Im with Letting agent 101 How can it save agents money? on the other hand why are you making the decision on the tenants referencing you should pass your referencing finding to the landlord to make the decision. Standard practice! that way you don’t have to justify the referencing, in any case there is no referencing company that will guarantee the referencing is legitimate, they will only provide you the information they have received. If you are charging the landlord for the tenant referencing and using a third party do you charge the landlord the true cost if not you are not disclosing the true cost and could come back on you!.
There was an earlier artical reporting that since the fee ban in Scotland most agents do their own referencing to save money. Why would anyone use a third party referencing company? doesn’t make sense! I do all my own and save at least £5 on everyone, Simples!
I can show you lots of reasons why you would be better served to use a 3rd party referencing company. I suspect you may not realise the depth of checking that is undertaken by these companies and the fraud I also suspect you’ve been exposed to.
If you’ve not been burned by a fraudulent tenant – then it’s only a matter of time and now there’s more fraud than ever before.
But then again I suppose ignorance is bliss and most people only react to a bad experience.
In this “new world” – for the sake of £5-£10 are you really going to risk your Landlords property and your income ???
VOUCH, in my opinion will change the face of referencing. Those agents who are happy to pay £15 upwards for referencing when its important to cut costs at the present time should look at what the main differences really are. Forget the Tenant bashing and try and think how easy the referencing should be for all. You want the tenants to hurry up and complete, we all do, VOUCH makes the whole process simple for everyone, surely thats a good thing? Well done Jaime and Simon!
Cutting costs isnt the priority for me. I need to generate a lot more revenue so I dont see how a £9 saving per reference is going to signifcantly help me?
Previously agents made a profit on referencing, be it £20,30,£100 per reference. So the cost of £5 if absorbed is either a loss of profit of £25, £35, £105. Profits on references may be high but will landlords accept the true cost of each viewing at £50 -I doubt it!
Such cynicism!
Must be doing something right to sign up a 1000 agents who are, presumably, independent…
Good for you Simon!
If 1000 customers needed to save about £10 in costs and put there overall businesses at even greater risk then good luck to them !
let’s see what happens when they’re 6 months down the line and court cases are coming back at them due from Landlords due to rogue tenants.
Buy cheap buy twice………. OR
Cheap and fast = poor quality
Fast and quality = not cheap
Cheap and quality = not fast
lets see !
Fair play to Vouch but from a letting agent perspective it is very short sighted in my opinion
Unless Vouch can tell me how I can replace £300 per tenancy as a minimum? If so ill sign up today!
Well really – the tenant does all the work and fill’s in all the forms. Who’d have thought referencing was that simple ! shame most of the issues with referencing are based on tenants who dont complete forms, don’t inform guarantors, fill in the wrong details and even attempt to defraud you with exaggerated incomes and so on ! But hey it’s only a £5 must be a bargain right……………………..
Do you verify the references? With an automated process who checks that the references are genuine from the employer and landlord?
Also, we ourselves are losing 25% of our turnover due to the fee ban. We were paying £14 a reference so how does saving £9 a reference make a substantial difference to my business?
Sorry for the direct questions but it would be good to see how this really helps us replace income?
Once the tenant has completed their side and it goes into “review” you are free to contact the referee, of which the details are contained within, this will also be matched with the proof of income uploaded coupled with the bank statements. this should satisfy the income and affordability side of it. The current Landlord again can also be contacted. you are paying just £5.00 for the convenience of having the data collected much quicker and efficiently and then verifying. With the tenants being able to apply willy nilly you can get 3 done for the price of your one your paying now. I do not work for VOUCH, but have used them successfully for the past 16 months and very pleased with the progress they have made. Always listening to the end user and adapting to suit.
thanks. I can understand the appeal in a small way but you are still doing the work yourselves?
What happens when a tenant fails to pay and your landlord asks to see the references that you have verified yourself? If this happens now I can happily tell the landlord that we employed a third party company who have carried out thorough checks.
Seems to me that you are paying for a company to send a few emails out asking for the references
I think you may be missing the point in regards to you can always check yourself. Ask yourself the next question, even if the landlord does ask “who does the referencing?”……. and how thorough they may or may not have been (although remember you control this too) for what purpose would that information be relevant other than a claim for rent guarantee insurance etc. Of which, Alan Boswell are supporting and offering this rent guarantee insurance on the basis of a valid VOUCH reference. If they do not pay and the case goes to court they do not ask to see references before hand….. simply the signed agreement and any relevant documents (and proof they have been given) that make the tenancy enforceable.
In the past 20 years we have obviously had tenants fall into arrears. The conversation with the landlord is much easier when we prove how thorough the referencing agency have been in their checks. If we had verified everything ourselves the conversation would have been much different and they no doubt would blame us for their losses.
Not every landlord wants to pay for a rent guarantee unfortunately.
My other question, which I cant see answered, is how does the £9 saving per reference help save a lettings business losing £300 per property on tenant fees at a minimum? I don’t get how that saving justifies the verifying of referencing?
As I said, I would sign up today if this can be proven as to why it is more beneficial than my current supplier who do all of the work and are a hell of a lot more thorough than one of my team could ever be in referencing a tenant in full?
Totally agree Letting agent 101 – saving a couple of quid on referencing isn’t going to solve the issue of lost income. The reality is the checks undertaken have more holes in them than a collander and when (not if) you get problems – you’ll be totally liable as an agent for the checks undertaken. Bring on the court cases ! – but you saved a £10 so don’t fret. All that glitters is not gold – you’re paying Vouch £5 for in effect a credit check which you can get cheaper elsewhere and then having to do all the work yourself AND you’re accepting all the liability that goes with it ! And whilst you’ve just saved £10 a reference you’ve now tied up a member of staff to do the referencing when they could be out trying to generate some more income. You’ll never grow a business by cutting costs …………………… But bravo for Vouch for making their money – god help the agents down the line
Vouch have obviously built something agents want but I think its short term thinking personally
Fair play to Vouch though, 1000 agents is good going.