There has been a renewed interest in outsourcing in the letting industry, according to The Letting Partnership.
The company reports that one major outsourcing growth area is in client accounting and client money protection (CMP), driven by new regulations.
Many agents have had to adapt to survive over the last few months, with some looking at cost-cutting measures – and this is just one of the potential benefits that can be seen in some companies that use outsourcing.
Chris Mason, operations manager, The Letting Partnership, commented: “Although the movement of travel was already set, the pandemic has only expedited the upswing in outsourcing within the sector.
“Since April, we have seen a sharp rise in outsourcing demand, as agents seek to focus their attention ‘on the business’ rather than ‘in the business’ and redeploy their teams to play to individuals’ strengths.
“While we know that agents appreciate the opportunity to focus their energies on strategic business development, leaving specialists to quietly get the job done, for some there are some deep-seated barriers to making the switch to outsourcing.”
A recent Deloitte study highlighted the top reasons businesses decide to outsource, with 58% looking to reduce costs, 57% wanting to focus on core business, while 47% looked to solve capacity issues.
The Letting Partnership has provided the following advice for agents:
+ Remember, you are the decision maker and will always be. You should feel comfortable providing input and influencing an outsourcer’s approach. Any outsourcing company worth your custom should be able to provide virtually seamless transition and no drop-in service.
+ Outsourcers are specialists in their field. To gain peace of mind, look for a provider who has industry membership, professional indemnity insurance that is robust enough for the business they undertake – an outsourcing company should be happy to be completely transparent about this. Ensure too, that outsourcers have specialist cover suited to their business.
+ Your outsourced provider should offer genuine transparency and make information available to you at all times – it is your information after all!
+ Be wary of any client accounting service providers who refuse to set up individual client accounts – pooled client accounts or the sweeping of your client money elsewhere should ring immediate alarm bells.
+ Outsourcers should be able to offer significant economies of scale and real expertise.
+ The outsourcer should be able to work with your existing systems. There should not be any need to buy into a new piece of software in order to work with your chosen provider.
Welcome to Eye Marc.
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The economics of this won’t work in lower value areas, or anywhere less than average U.K. rents. Everywhere else, little or no profit for the agent or the remote managers as there will be too many sticky fingers trying to share the same pie.
Remote management is usually a disaster. No understanding of the property, area, contractors etc etc.
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Interesting that you have found remote management that disappointing, I have a vested interest so am biased but surely a proper handover where the outsourced supplier attends inspection early on (taking video) , demonstrates their supplier list in the area beforehand and specialises in management can work and add value?
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I don’t buy it Collin. To manage a property it needs someone with local contacts, the ability to nip backwards and forwards to check works etc. If my tenant doesn’t pay or requires a meeting I expect my agent to be nearby to help resolve issues. Agents are far better off doing it in-house and keeping 100% of the fee income. Better service, better model, more profitable.
Most of the outsource models have failed for these reasons. You will have to make it a cheap service to be attractive to agents and cheap is generally poor quality. I’m sure you’ll disagree, of course.
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