How Not to Market to Private Landlords and the Private Rented Sector
Landlord readers of this column will know that LettingFocus’s stance these days is now very much built around consulting with organisations who sell products and services to the private rented sector. Basically we tell them how to do it better!
Our two biggest client groups are banks / financial institutions who sell mortgage loans to landlords (commonly known as “buy to let mortgages”) and local authorities / housing associations who face a huge task trying to get private landlords to make their properties available to people on low incomes who turn up at councils offices in droves needing a roof over their heads. (The local authorities often cannot help them so the private rented sector is now the default option.)
As well as doing consulting work for organisations, I still do some one to one consulting work with private landlords and keep “in the mix” with mortgage brokers too. I really like to do this because it is by talking to landlords and brokers that I get to see first hand why the products and services that the banks, local authorities and other clients groups are trying to sell to landlords miss the target so often.
As an example, on Friday, I had lunch up in the city with a mortgage broker called James Ball. A good guy, he tears his hair out at the banks’ complete lack of understanding about what private landlords need. “In their mortgage criteria they even still talk about DSS Tenants”, he laments. (DSS Tenants is a term that has long since been replaced in landlords’ vocabulary with Housing Benefit or Local Housing Allowance.)
Fast forward to later on Friday and I’m perusing a local authority website in the Midlands area that is supposed to attract private landlords to get them to let their properties to people on DSS, sorry, Local Housing Allowance.
This site has been lauded a bit and spoken of in glowing terms in some quarters.
As I’m also working in this area, but for a different group of local authorities to set up something better, I call up the number on the site posing as a tenant. After a 60 second wait to be answered (well it’s better than most utilities cos, I guess) and being handed off to other people three times (including one who couldn’t understand how I got through to him at all), it turns out there are actually no properties on their site at all.
“Oh, I was hoping you were a landlord with some properties to put on our site,” says the man at the other end of the line with more than a hint of disappointment in his voice.
Competition and Solutions
Mmm, I am not surprised. Competing in this on line space against the likes of the free spending big portals like Rightmove and the internet savvy landlord facing sites like Upad, Gumtree and Discount Letting, and hoping somehow to be found by landlord punters was never going to work in the first place.
There are solutions and ways that would allow this local authority to attract landlords, but doing it this way isn’t one of them. The right strategy has to be designed by someone close enough to the private rented sector to understand how it really works for the end customer, the landlord. Often this expertise won’t be found internally within the local authority.
Thinking about my mortgage broker friend again, we talked about how my properties in Kent were probably going to be clobbered, both price and rent wise, by the closure of the only big employer in the area, Pfizer. Donny Rumsfeldt would call the closure an “unknown unknown” – one I could not have predicted 6 years ago when I bought there, but heh, that’s life!
We chatted some more, James and I.
Then I said, “If I was a smart lender, I would anticipate the negative impact on house prices and rents, so I would cut the loan to value ratio for new applications for mortgage loans in areas where such a thing had happened. And I would raise the loan to value where positive regeneration was happening.”
We thought for a few seconds then laughed. But that would require a clever underwriting approach, which would be unlikely from the kind of bank that still calls Housing Benefit, “the DSS.”
MORE ABOUT LETTINGFOCUS AND WHAT WE DO
LettingFocus.com is the home of Private Rented Sector Information and expertise and I’m David Lawrenson, a landlord and property investor myself for over 25 years and author of “Successful Property Letting” – the UK’s top selling commercially published property book for the last 3 years. 25,000 copies sold (to Jan 2011).
Services to Businesses and the Public Sector
Primarily we are consultants to a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers. We help them develop and improve their landlord facing or buy to let product strategies, marketing and services.
We also write for property websites and we are regularly quoted by the media.
Services for Private Landlords
We also find a limited amount of time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor. We pride ourselves on giving independent unbiased Buy to Let Advice on a one to one basis.
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