In-house or Outsource?
To in-house or outsource? There’s often a debate about the best option when it comes to the subject of property reporting. In some parts of the UK many letting agents are outsourcing their mid-term and inventory requirements, but in other areas there is a high percentage of agents that still use in-house staff to produce reports. Are there advantages to outsourcing, or is it cheaper and more profitable to perform the functions in-house? We look at the options in more detail below.
In-house or Outsource?
Historically, property reports have been completed by agency staff, leading some of the more traditional agents to continue to keep all their reporting processes (inventories, mid terms, check ins and check outs) in-house. Keeping control of the whole process might allow an agent to be more flexible, making it easier to arrange property visits with tenants and react quicker to immediate visit requests. Plus it may minimise the risk and reduce the dependency of using an external provider, contributing to greater accountability within the agency for the services provided to landlords.
Clearly, if an agency’s staff are being underutilised then it can seem sensible to use them to perform non-core activities. However, there needs to be a consideration for the service provided to the landlord, and making sure that they are getting the best service possible for their fees.
From a dispute perspective, an agent might consider an external provider to provide an unbiased, detailed and professional service, and to be the ‘knowledge expert’, so therefore able to handle a variety of difficult and sometimes strained situations (particularly at check out), which agency staff might not be equipped to handle.
Generally it’s the quality and detail in the report that is favoured by the TDS, not just whether it was compiled by an independent clerk. Whichever option you run with, the devil is always in the detail with an inventory or check out report, so it’s important that the person carrying out the appointment has the necessary skills, aptitude and training for the job. It’s not a job that suits everyone, and requires a different set of skills to a brilliant negotiator or new business specialist. Any in-house staff who carry out property reports need to be fully trained to prevent there being any issues with the quality of reports so that they satisfy the adjudicators.
There are also the financial considerations. All agents face increasing financial pressures, whether that be the cost of advertising, premises or staffing costs, leading some agents to review their service delivery arrangements. It may be a cheaper option to train existing staff to provide these services rather than pay an external provider, provided those staff have enough scope in their role alongside their other responsibilities.
But, taking into account staff salaries, overheads, petrol, parking, professional indemnity insurance and possibly the extra time for an inexperienced person to carry out the inventory, it may cost up to 50% more to conduct each inventory report in-house. Plus there’s also the opportunity cost to consider, by having an agent conducting inventories rather than focusing on their core function of business development and finding suitable tenants. If resourcing and staffing are finely balanced, it may not be appropriate to add additional responsibilities to an already busy team. Outsourcing can free up admin staff, so they don’t have to be out of the office for several hours gathering information, and won’t have the labour-intensive task of writing up the report when they get back to the office.
Best of Both Worlds
There are lots agents across the UK who are employing a hybrid solution. Many agents keep their mid-term/property inspection visits in-house as they want to retain that connection with the property, so they can talk confidently when they are speaking to the landlord. The mid-term visit is often a shorter appointment, requiring the agent to inspect the property to make sure that the tenant is looking after it, and make sure there are no issues that might be breaking any clauses in the tenancy agreement. Plus it’s also a useful opportunity to check for any maintenance issues that the landlord needs to be made aware of. It can help to ward off tenant/landlord disputes before they become major issues, and it retains that important direct connection with the tenant, which is important as the length of tenancies continues to grow (increasing to an average of 20 months in the last 5 years).
The more detailed inventory, check in and check out parts of the tenancy reporting process can be outsourced to a professional inventory clerk who can supply expert knowledge, advice and support. Often the professional, detailed inventory reports presented by external inventory clerks impress landlords, and demonstrate that the agent is providing a professional service and working to protect the landlord’s property by using the best qualified people to create and supply these reports. Many agents have outsourced this process as they know it offers them another competitive edge, while freeing up their business and potentially saving money.
The good news is that by using TouchRight Software (through an app that runs on an iOS or Android mobile phone or tablet device), an agent or inventory clerk is able to create all of their property reports quickly and easily at the property, without the need for extra admin and typing.
In a competitive market where every letting agent is looking for more landlords, the quality of property reports could give a competitive edge and enhance an agent’s reputation.
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