Is it time to rebrand application fees?
With the Government overlooking any radical reforms for the lettings sector before May 2015’s general election, there are at least six months of stability ahead. Or are there? While Mr Cameron might not be planning a rental revolution any time soon, tenants are still up in arms over letting fees. And it appears there’s always a survey to back up their disgust. One of the most recent was carried out by Populas – a research and strategy consultancy – claiming 60% of private tenants believe UK letting fees are poor value for money. Tenants feel the average letting fee of £350 – a figure settled on after another survey of 60 lettings agents in 2013 – is unjustified. Split up into £250 of ‘application fees’ and £100 of ‘inventory fees’, tenants can’t understand why they should be charged for a service.
But here’s a question. Do you, as a letting agent or property manager, explain what’s involved in an inventory and why they are so vital? Do tenants actually understand that a third-party, unbiased inventory protects them and their deposit? Surely they understand a professional company brought in to conduct an inventory needs paying?
Perhaps application fees should be divided up according to how many months the tenancy agreement is for. So, for a 12 month tenancy with a £250 application fee, that’s just £20.83 a month. Would tenants prefer to be billed on a monthly basis to ease the financial cost? Should the application fee be added to the monthly rent? Ha, don’t even go there. Tenants don’t want to pay a fee at all. They’d like all letting agents to work for free. Perhaps the notion of wages and overheads doesn’t apply to property?
Let’s take different angle. Application fees as a term is massively misleading and may be the root of the problem. Tenants have it fixed in their head that the fee they pay covers the printing of some paper and the witnessing of a signature. We all know an application fee actually covers a pre, during and post-tenancy service, rather than a one-off event.
Are application fees ripe for rebranding? The service an agent provides during a tenancy is like roadside assistance but for tenants instead of cars. Could application fees be marketed as an ‘account activation and ongoing support’ service – dispensing with the word ‘fees’ altogether? Are there other perks that could be packaged up within the fee – discounts at local retailers, a gift voucher for a take-away – even the option to add a weekly cleaner or monthly gardener? Perhaps a menu of ‘included and optional services’ is an avenue to explore? There are methods of adding value and even making fees seem advantageous, even if you initially have to fund one of the services yourselves. It should be part of a wider drive to change the perception of what agents charge and what tenants receive.
* Simon Duce is the Managing Director of the ARPM Group, which provides national outsourced lettings and property management services.