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Paper reporting and management could be prohibiting agents’ growth

Using paper, spreadsheets and other legacy payment administration processes could be prohibiting letting agents from growing their businesses, according to PayProp.

The automated rental payment provider says agents who digitise parts of their payment processes and partner with the right PropTech providers could expand their lettings book without having to take on new staff or significantly increase overheads.Are manual processes knocking agents’ confidence?

According to the Fixflo Report 2017, over 10% of letting agents still use spreadsheets to manage repairs. And these firms are over 10 times more worried about their ability to take on additional landlord clients than those using specialist software.

“Frankly, I am not surprised to hear that agents using spreadsheets to manage repairs are vastly less confident in their ability to grow their lettings book,” says Neil Cobbold, PayProp’s Chief Operating Officer.

“In our experience, the same attitude prevails among firms who practise manual reconciliation and banking processes, utilising other systems as well as spreadsheets.”

“Handling these important processes manually increases the chances of human error and takes considerably more time, so it’s understandable if these agents are less confident about taking on new instructions,” he adds.

No fees, no worries

Fixflo’s study, which spoke to almost 400 lettings professionals, also found that the impending ban on upfront fees charged to tenants remains the biggest worry among the letting agent community.

Over 40% of property professionals answering the survey said that the prospect of a fees ban is the biggest challenge to their lettings business in 2017. The next most prominent worry cited by agents was a lack of new landlords and instructions.

But agents need not worry too much about fees, says Cobbold, who is also an expert panellist on Property TV’s Property Question Time on Sky Channel 198.

“Digitising certain everyday processes such as the reporting of repairs and management of payments could help to save agents time and help them grow more efficiently.”

Cobbold says PayProp agents typically grow their lettings portfolios by 23% annually – without increasing their cost base.

Other data suggests that the average UK agency earns commission of 10% and operates at a profit margin of 12% to 16%.

“So, an average UK agent who becomes a PayProp client could easily absorb the 19% loss of rental income projected as a result of the fees ban, if they simply grow their portfolios by just 10%,” Cobbold concludes.