The real cost of expanding or diversifying your agency

The motto ‘speculate to accumulate’ is true – growing or diversifying to capitalise on market conditions is a great way of increasing profits and building a more secure business model. The whole idea of growth, however, is to increase profitability and not see any new income wiped out by set up costs and bigger overheads.

If you’re a sales-only agent thinking of branching out into lettings, or a small lettings office looking to expand its managed portfolio, balancing the books to ensure any growth pays its way will be key.

Agents have two choices:- expand at an in-house level or use a bespoke outsource partner to facilitate growth. Coming to this decision will have a massive impact on profitability and also on professional standards. Now, as we face the homeward run into the end of 2016, is a good time to weigh up any expansion plans you have for 2017.

Too many agents will look at the obvious costs when growing their business but there are smaller and less obvious costs that can make an unhealthy dent on bottom-line figures. The following should all be factored in to your expansion plans. Remember, many of these costs will be lost or reduced significantly if you partner with a lettings-specific outsource company.

Here’s our top 6 considerations when expanding or diversifying your agency:-

Recruitment – lettings and property management is an industry full laws and legislations. Specialist staff are needed but the pool of talent is small. You may have to pay a premium for qualified staff, fork out for a specialist recruitment agency or go down the uncomfortable route of poaching. Also factor in your time – sifting through CVs and interviewing will take up time you could be spending winning instructions or renewing tenancies.

Training – you’ll want to have confidence in your lettings staff so the most up-to-date training is essential. Training doesn’t come cheap – especially if you’re starting from scratch by transferring a sales person over to lettings. Don’t forget ongoing training for all lettings staff so you’re satisfied they’re abreast of the ever-changing rules and procedures.

Industry bodies – landlords and tenants do look for a letting agent who belongs to the leading trade and professional bodies – it’s increasingly becoming part of their decision making process. Belonging to industry organisations also ensures you receive real-time information and news about the lettings sector. Factor in membership fees for both your agency and individuals.

Staff set-up costs – congratulations! You might have snagged a brilliant property manager but you now have to provide a desk, a computer, a fuel allowance, stationary, a mobile and perhaps even a car. There’s also the increased use of resources – a higher consumption of electricity, and more wear and tear in your office.  If you’re expanding on a grander scale, you’ll additionally need to think about the leasing/purchase of a bigger premise and higher running costs. Compare business electricity prices and get the best rate possible for your business!

Public repositioning – if you’re moving from sales-only to dual agency, your budget will need to cover a degree of rebranding. You’ll need to change to your website to reflect lettings, perhaps invest in lettings or property management-specific software, hire a new or additional accounts person with specific experience, re-write and re-publish your marketing materials and alter your office signage to advertise your lettings services.

Incentives – if you’ve gone to the trouble of employing good staff you’ll want to keep them and make sure they perform on a daily basis. A good rate of commission, profit-related pay, promotions with higher salaries and incentives will help keep staff motivated and focused.

Despite the outlay, expanding or diversifying your agency will pay dividends and with an outsourcing partner, you can slash the investment and effort needed to capitalise on the current lettings market.


Simon Duce is the Founder and Managing Director of ARPM Outsourced Lettings Support - a business designed to help small and start-up letting agents/property managers offer a full suite of property management and tenancy administration services through outsourcing.

You May Also Enjoy

Estate Agent Talk

Tips on Getting the Best of Costa Del Sol Property Market

There are a variety of reasons why you would want to buy a property in another country. Perhaps you’ve discovered the ideal holiday resort and are looking for a permanent location to store your belongings. Perhaps you like the thought of spending your senior years somewhere warm and bright. The mild climate throughout the year,…
Read More
Breaking News


A roundup of the week’s top property and proptech news stories in partnership with Proptech-X   Table of Contents Renter’s Reform: The biggest upheaval in private renting since the 2004 Housing Act Most Homeowners Overly Optimistic About Property Value, According to Figures Property Market: Boom or bust, does it matter? There is a bigger threat to…
Read More
Mark Hayward
Breaking News

New Property Podcast launched with Mark Hayward: ‘The Residential Expert’

New podcast to discuss the latest property industry news and predictions, as well as advice for agents. New podcast to discuss the latest property industry news and predictions, as well as advice for agents. It will feature previous Propertymark CEO, Mark Hayward, and is hosted by home setup service, Just Move In. Episodes will be…
Read More
Quick ways to add value to your property
Estate Agent Talk

6 Ways to Avoid Common Rental Scams

The rental market is incredibly competitive right now. There’s limited rental inventory, and people are clamoring to find places all over the country. Unfortunately, along with this increased demand and high level of competition among renters also comes an uptick in scams. Unscrupulous people are taking advantage of desperate renters, so what can you do…
Read More
Breaking News


Daily bite-sized proptech and property news in partnership with Proptech-X.   Proptech fu3e. secures £3.5 million investment from Gresham House Ventures Gresham House Ventures, a growth equity investor specialising in software and digitally-driven businesses in the consumer, healthcare, and service sectors, has made a £3.5mn investment in fu3e., an adaptive management reporting software platform for…
Read More
the value of trees in your garden
Home and Living

How much Value does a Tree add to your Home?

For those of us lucky to have a garden(s) or even a large parcel of land with our property then what it contains can have a big effect on the overall value. Outside of what we can build, mature plants, especially trees, can offer a big persuasion with potential buyers and increase value of real…
Read More