As part of our business consultancy at LettingFocus.com we advise organisations – both public and private – about how to connect with, market to and sell products and services to the growing private rented sector.
Some sectors are very good at marketing products and services to landlords and designing products that landlords actually want. Other sectors are middling and some sectors are downright awful.
I think one of the best supply-sectors is insurance (buildings insurance, rent guarantee insurance, legal insurance, appliance insurance etc.)
Probably the worst two big supply-sectors may be mortgage lenders (buy to let mortgages) and local government / housing associations (local letting agency models and other schemes to get landlords to let to people on housing benefit, become accredited / licenced etc.)
Insurance – Good at Marketing, Good at Product Design
One of the best sectors is the insurance sector. Why?
Well, in insurance there has been a lot of innovation in product design. We can see this strength just by looking at the rapid innovation over the last ten years in the building insurance product – a product that all landlords with freehold properties will buy at some point (unless they are very silly and like taking huge risks).
Here the nature of cover has evolved and diversified over time to meet landlords different needs.
This innovation has been led by insurance brokers, who have a good understanding of the market and what it wants – and are then able to convey this back to insurers, who seem to listen and respond.
The insurers and insurance brokers are also savvy at marketing. Look online and you can see that they are usually very effective at using the web to market their products effectively too.
Mortgage Lenders – The Jury Is Out
Mortgage lenders (with a few exceptions like Paragon, Aldermore, CHE and, to a lesser extent, YBS and TMW) are generally poor at product design, though the mortgage brokers are good at doing the marketing for them.
Though the buy to let mortgage has been around since 1996, lenders’ criteria for issuing loans are too often confusing and illogical and the product design is still very lacking.
There are huge profits to be gained for lenders who really understand the market – and can design buy to let mortgages that landlords really want and which are designed around landlords’ different needs.
The mortgage brokers understand all this – and they are also very effective marketeers. But for some reason the mortgage brokers (unlike their insurance broker counterparts) seem unable to get mortgage lenders to listen to them.
Most mainstream buy to let mortgages, therefore, still do not meet landlords needs. And good profits for the lenders (especially the banks and building societies) are going begging.
Local Government and The Housing Associations
Oh dear, this is a supply-sector that is mostly failing in its relationship with private landlords.
OK, I accept that both are partly non-commercial, but both need private landlords to house people.
Local government needs to get landlords on board to let to people with limited housing options, to join accreditation schemes and to make their properties safe. And increasingly, housing associations are getting into bed with institutional investors in “build to let” ventures.
There are a variety of products that the councils have for landlords – Social Letting Agencies, Guaranteed Rent Schemes, Deposit/ Rent Guarantee Schemes to name but three.
But in the majority of cases councils and housing associations have failed to market to landlords and tenants effectively, especially online, which is where most landlords and tenants now look for information.
Town Hall Politics
But why are they so often, so bad. I think there are two reasons:
1. POLITICS: Too often at the town halls, the private rented sector is seen by elected Councillors as a political football to be prodded and kicked about, as and when the need for votes arises.
To the frustration of the junior folk at the councils who work with the homeless (and also with potentially willing private landlords on the front line), this is reflected in a lot of the anti-landlord policy coming out of the town halls.
2. LACK OF KNOWLEDGE: Very few senior executives at the town halls (and few Councillors) come from a private rented sector background.
When they need advice from outside about how to connect with the private rent sector, they may very occasionally go to tender (or they may not), but they often hire experts who may know all about social housing, but who too often have little or no understanding of private landlords and how the private rented sector works.
The councils and the housing associations might as well hire an expert in chemical engineering, football management, oil surveying or tiddlywinks – because social housing is a whole world away from private rent.
The same criticism can be levelled at the housing charities and the London Assembly, where we have yet to meet a single staffer with experience gained at a high level in the private landlord sector.
Often the worst failure is the councils’ lack of savvy online. So even when they design a decent product for landlords, it often fails because landlords on their patch don’t know about it, because it is not findable in the online world. We see lots of decent initiatives, potentially of interest to landlords, which fail to register on landlords’ radars, so very few landlords are ever got on board. (How many London landlords have even heard of the London Rental Standard?).
And because of this failure, poor people with few housing options continue to live in unsuitable accommodation, often in expensive B&B accommodation at great cost to local taxpayers – a bad outcome for both the homeless and for taxpayers.
Services to Businesses and the Public Sector
We advise a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers.
We help them develop and improve their services and products for private landlords.
David Lawrenson, founder of LettingFocus also writes for property portals, speaks at property events and is regularly quoted by the media.
Services for Private Landlords
We help landlords and property investors by showing them how to make money in the private rented sector using ways which are fair to tenants and which involve minimal risk.
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