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The complete guide to setting up a Local Lettings Agency (LLA2). Agenda. What stage are you at? Introducing our LLA Creation Triangle The landlord product Staff skillset Power, autonomy & flexibility Business planning. You have……. Decided to go ahead with a LLA but not
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Agenda • What stage are you at? • Introducing our LLA Creation Triangle • The landlord product • Staff skillset • Power, autonomy & flexibility • Business planning
You have…… • Decided to go ahead with a LLA but not sure where to start…. • Decided that your PRS Access Scheme is good enough to introduce charging & want to know how • Been told by senior management that your PRS Access Scheme needs to make some money • Decided you want to know more about LLA but are so far un-decided whether it’s right for you • Running LLA, but not hitting targets / have concerns
Bust a couple of myths? • DO IT NOW! • If Letting Agents can do it, why can’t we? • Landlords won’t pay for something they currently get for free • Money making in the first year • Marketing – is it important? • Staff skillset and freedom to operate • What about rent?
Procurement of rental propertyin the current climate is tough • What do landlords need in a LLA service? • Low risk of rent arrears • Low risk of property damage • Long term tenants • Ongoing assistance/help with problems • “Slick” back office • Consistent transparent professional service • Payments that arrive on time
Procurement of rental propertyin the current climate is tough • What stops landlords working with us? • Poor marketing – don’t know you exist • Hassle • HB • Rent arrears • Property damage • The tenant is ill-equipped to manage the tenancy • Bureaucracy • Better deals in the private market
Procurement of rental propertyin the current climate is tough • Things to remember: • You will not create a service that every landlord wants to use • Decide on your “landlord type” & create services that will appeal to that type • To those landlords that do decide they can get a better rent in the private market, what can we HIGHLIGHT?
Procurement of rental propertyin the current climate is tough • Their private tenant may end up on housing benefit in the current economic climate • Their private tenant may fall into rent arrears • Their private tenant may damage the property • Their private tenant may only wish to live in the property for 6 months & then they have a void & new agency costs • They don’t know much about their PS tenant
Introducing our LLACreation Triangle LANDLORD PRODUCT BUSINESS PLAN/ FUNDING POWER AUTONOMY FLEXIBILITY STAFF SKILLSET
Landlord product • What constitutes the landlord product? • Market research • The services provided to the landlord • Service unique selling points (USPs) • Customer service • Lettings pack • The pricing structure • Landlord payments • How the service is communicated to landlord
Market research • Consultation with local landlords/agents • Phone, e-mail, landlords’ forum, survey surveymonkey • What services do they want? • What services would they pay for? • What are the positive/negative aspects of the current service (USPs)? • How much would they be willing to pay?
Ongoing consultation • Develop a landlord business club • Use the business club for ongoing LLA consultation • Use the business club as a marketing tool • Tackle ongoing issues as they arise
LLA service development • Market research informs service development • So what services are you going to offer? • Can these services be “hassle free” for landlords – e.g. could you offer guaranteed rent or a leasing style product? • Review all potential LLA services from a “What added value do they bring to landlords” point of view?
Unique selling points • What services do you provide that make your LLA unique? • Tenants are “tenancy ready”/prepared • Long term lets • Your volunteers?/Mentors? • More attractive/innovative bond scheme? • You simplify the HB system for landlords? • You provide “hassle free” lettings? • You minimise voids?
Customer service • “Assistance” policy – exactly what assistance the landlord will receive in event of any issues • Lettings pack • “Terms of business” • Service standards • “Tenancy Manager” • Out of hours emergency assistance
Pricing structure • Must be transparent • Featured in the “lettings pack” • Must bear in mind LHA rates vs. market rates • Must bear in mind what competitors are offering • Landlords must be able to associate tangible benefits in paying the fees • Considering your expenses, resources & financial goals
Marketing • Branding • Literature must look “professional” • Dedicated website • Where will you advertise your service to landlords? Newspapers? Radio? • Launch event?
Staff Skillset • What are the considerations with regards to the staff skillset? • Staff training & development • Consistent, professional, transparent service • Strategic vision/business development • Transition from existing schemes • Working relationship with other departments & partners
Staff training & development • What are the objectives of your scheme? • What are the posts & job descriptions required to deliver your objectives? • Essential skills? Knowledge of PRS & local market? Experience of working with landlords or landlord groups? Leadership skills (co-ordinate with partners)? Negotiation skills? • What are the skills gaps in current staff? • Identification of training opportunities
Consistent, professional,transparent service • Robust, regular inspection procedures • Robust end of tenancy & void procedures • “Tenancy Manager” for landlord & tenant with direct contact information • Out of hours service? • Regular communications with landlord – (ie what have you done that month to deserve their fee?)
Strategic Vision/BusinessDevelopment • Does your scheme have a long term vision? • Do you have plans for how your service will develop? • How many properties do you need to procure per month to support your development? • Void strategy? • Rent arrears strategy? • Tenancy sustainment strategy?
Transition from existing scheme • Pilot with a selected group of landlords • Separate services • Straight to full charging • Strategy & incentives to transfer properties • Incremental fees • No sign up fees
Working relationship with otherDepartments/Partners • Identification of other Departments/Partners who have an impact on service delivery • What is the severity on the service delivery of poor performance & how can this be managed? • Partners? Service level agreements • HB • Floating support • Repairs & maintenance contractors
Power Autonomy Flexibility • What do we mean by power autonomy flexibility? • Back office monitoring & management • Managing conflict of interest • LHA rates & rent collection • Model/structure • Senior management support
Back office monitoring &management • Better use of IT • Robust systems for administration, monitoring & management of the scheme • Accounts facility & robust financial monitoring • “Officer notes” to ensure consistent approach to landlords & tenants even when staff absent • “Slick”/minimum paperwork
Managing conflict of interest • For local authorities developing in-house • Property inspections & Environmental Health enforcement function • Serving notices & Housing Advice stay-put advice
LHA rates & rent collection • LHA rates vs. market rates • Negotiations on rent with landlords • Access to discretionary housing payments? • Tenant top ups – how will this be managed/ collected? • Direct payments • Rent arrears strategy
Model/structure • Built in flexibility so that staff can negotiate and resolve issues effectively & efficiently • Reduction in bureaucracy • Reporting structure • Management structure
Senior management support • Are senior management committed to the project? • Degree of involvement in the project? • What are their reporting requirements? • What do they want to know about the project performance?
The business plan A business plan describes the complete operation of the LLA and typically includes: • Vision for the business • Marketing plan • Running the business • Financial projections • Short/long term goals & regular review stages
Financial projections • How many tenancies will be created/month? • How many do you need to procure? What is your worst case scenario? And best case? • Base financial projections on worst case • Assumptions to be made: • Average rent • Tenancies created/month • Charges • How many tenancies will end per year? • Costing the “unknown costs”
Financial considerations • What do you currently spend on PRS procurement? • Existing staffing costs? • Cost of administering bond/claim processing? • What are the costs to your organisation of doing nothing? • Identify source, sustainability, quantity of start up & ongoing funding
Financial considerations • When will the service break-even? What year? • What is the portfolio of properties that needs to be maintained to cover costs? Tenant find vs. full management • What mix of properties is required? Smaller properties generate less income
LLA’s – what’s important • Market research conducted is able to demonstrate a demand / gap for such a service (Viability Study) • Good communication / consultation with Landlords • Excellent initial and sustained marketing of service • The focus of the customer service is on Landlords • Good working relationship with Council Departments • Local Housing Allowance and average market rents are close • Back Office • Launch Event • Senior Officer / Member support
LLA’s – what’s vital! • Identified start up funding for the medium term (2-3 years) to allow service to establish (Business Plan) • The right model (reduce your weaknesses) • A product / service Landlords want • Guaranteed rent or another USP • Staff skills, passion, knowledge (‘can do’ people) • Staff freedom to operate in a commercial environment • Ongoing strategic vision / development
Conclusions • DON’T PANIC – steady approach! • Investigate the best way forward, viability study (baby & bathwater) • Need to develop Landlord relationships and start to develop a ‘product’ that works • Work more like a business (make sure you have a long term plan, it stacks up financially & you can be flexible to changes as they happen / before they happen) • Staff & freedom • Don’t be afraid to ask for help, this is outside of what you have had to do before
Contact details Inside Housing Solutions Ltd South Barn, Capel Road Rusper, Horsham West Sussex RH12 4PY T/F: (01293) 871107 E: email@example.com W: www.insidehousingsolutions.com