Alternative to licensing/accreditation? Bad landlords, look away now!

Kirsty

I am going to share something I learned about professional landlords many, many years ago.

When you meet with them face to face and run an idea past them they nod, they smile and if you are very lucky they will ask you a few polite questions and wish you well.

The mild mannered janitor if you wish.

Get them behind their PC and they turn into Hong Kong Phooey! They pull no punches. They have thinking time and they tell you what they really think because it's safe to do so from behind a PC screen.

If it's market research you are doing then you are in the right place behind your PC. You also need to be engaging on other forums such as Landlordzone and Property tribes too.

However, do bear in mind that it's generally only landlords with multiple properties using these forums. There are exceptions to the rule as newcomers find them via search engines but the regulars will generally be full time landlords.

I do worry for you though because you appear to be doing your online research so late into this project of yours. You have also said that your market is unlikely to be portfolio landlords so that begs the question as to why you are posting on this forum at all.

You have described your market but these people do not tend to consider themselves to be landlords. This is because they are out at work all day laying bricks, teaching, driving taxi's and so on. They don't join landlords associations and most of them will not know what landlord accreditation is.

How will you reach that market without spending an absolute fortune on TV advertising?

Perhaps your market is in talking to letting agencies? It would be good to hear from a few of them as there are plenty of them in the members section of this forum. However, they do not appear to be engaging. I wonder why that could be?

Haha Anon, what a great description, Hong Kong Phooey I loved it!

I'm fairly new on Property118 as a poster, but I have been doing online research here & elsewhere, reading lots, not really saying what we were thinking ourselves, but the product development has absolutely evolved from issues I know exist - because this is what all the forums are talking about.

I'm already talking to letting agents, and other key players in the PRS, and have been for a while. And the reason I'm asking for thoughts on here now, is precisely because you are the toughest audience! Your harshest criticism is exactly what I need to hear now. So if we have any glitches in our product, we can still adapt.
So agreed, big hitters in the property world and major commentators on the forums are not likely to be our customers. But those that don't post, just read, may start to take it in and consider whether it's an option to help them.

If we can help some quality landlords differentiate their properties, over and above the rubbish that exists around them, it's got to be worth trying. Not just for the landlords' sake, but for the tenants too.

Hence one of my earlier posts was "How do you differentiate your properties".
And in this day and age of marketing and business development, we don't need huge TV advertising budgets to spread the word. Property118 doesn't advertise on TV does it? And it's doing a fabulous job and has huge amount of following. I will get around to the other forums eventually....

Hong Kong Phooey hey?

Well I've been called worse, actually I quite like it, Anon can consider that description stolen lol

Thank you too Kirsty, you're full of compliments today 🙂

Reply to the comment left by "Mark Alexander" at "13/09/2013 - 19:18":

I do try 🙂

A Scenario:
I've just converted a semi into two 2-bedroom flats. So, everything very new & nicely presented. Moreover, just spent a small fortune on meeting Part E Sound Proofing Regulations. Each flat generates £450 rent pcm.
My friend / competitor bought his pair of flats in the same street several years ago & they've been flats for quite some time so do not benefit from Sound Proofing. Each of his flats are a bit dated & generate £450 pcm.
Otherwise, our properties are very similar.
Would my flats be 5* and his only 3*?

If so, my flats might let before his but his will let as soon as mine have got tenants. But, if I were a bad landlord & he was exceptionally good, would my tenants still be happier than his?

If brand new spick-and-span is rated same as a used and little tired, then in my inexperienced opinion, a Landlord Rating will always trump a Property Rating.

Reply to the comment left by "Steven Burnell" at "13/09/2013 - 20:19":

Nice post Steven...sound-proofing is something we haven't considered, so well done, you've just helped us add to the product as it's now in! (or it will be...when I get my developers to include it as part of our scoring)...this is just what I wanted from this discussion, loads of other ideas about what to include! So thanks.

Anyway, back to your scenario...now we have included sound-proofing, we would certainly grade your property higher for that area, but given that there are countless other things we grade too, I can't say if that would make you 5*. One item of difference alone is not going to make one property 5* and one 3*. It would depend on whether it tipped it over the % score from one star rating classification to another.

Yes we'd hope your better quality flat will let quicker and/or for more rental price than your 'friends'. If he's lets anyway, do you care? If demand exceeds supply, it will let eventually.

Brand new properties may rate higher on condition of the structure, but may rate lower on size for instance. Or facilities. The little extras that a landlord provides are all included in our scoring.

And a combined landlord accreditation and a high star grading will trump everything! 🙂

Have I explained that okay?

Yes, thanks.
If your scheme gets its legs, how much will a landlord need to pay to get each of his flats/houses Star Rated? How often will they need to be reassessed? Who will do the ratings (RICS?) What if the landlord thinks the Rating is too low? Who will handle any Appeal? Will the appeal cost anything? What if Councils get involved & start to politicise the scheme or much worse, want to run their own Ratings as a Licencing Trojan Horse?

Do you have a list of proposed rating criteria & any ranking priorities & weighting factors attributed to them that you can put in the public domain?

Another Scenario:
If 2 landlords have 2 identical properties at the same rent, except one landlord spent his own money but the other got his updated via Green Deal so his tenant has to pay more for their electricity. Will the latter be scored lower than the former since the same benefits are costing the tenant more?

Okay we're into the nitty gritty...answers below...

"If your scheme gets its legs, how much will a landlord need to pay to get each of his flats/houses Star Rated?" erm you think I'm going to disclose that on here now? Suffice it to say that per month, over 2 years, it's not much! And the opening offers are ludicrously low. How much do you think they would be prepared to pay, as a monthly equivalent? And I may be able to give you a steer...

"How often will they need to be reassessed? " rating expires after 2years. Landlord can ask for an inspection sooner if they have improved the property for instance. A mid-term recheck is lower price than a full check.

"Who will do the ratings (RICS?)" No, not RICS. We are a (new) national team of residential property surveyors with construction industry background & already involved in surveys/property in other areas...eg for the insurance market. Very experienced. But not RICS.

"What if the landlord thinks the Rating is too low? Who will handle any Appeal? Will the appeal cost anything?" To appeal costs nothing. We are formng a panel who will review the appeals. However, our ratings are very objective, so we don't expect many appeals to progress to panel review.

"What if Councils get involved & start to politicise the scheme or much worse, want to run their own Ratings as a Licencing Trojan Horse?" - the benefit of the scheme is that it will be nationally recognised, not just local. All our marketing/PR is aimed at building that awareness. We have trademark pending, so if they wanted to set up their own, and pay/resource the inspections, they would need a separate brand, marketing and surveyors to do every inspection. In my experience, councils are trying to offload extra costs, not increase them.

"Do you have a list of proposed rating criteria & any ranking priorities & weighting factors attributed to them that you can put in the public domain? " - we have them, but not available in the public domain at that level of detail yet. Our website will have lots of explanation on it - full site launching mid October.

Re Green Deal scenario - gosh you are testing me, brilliant! Do you think rental valuations will be affected by Green Deal? I'm not sure they will at all.
But in respect of our scoring, both properties being equally energy efficient will score on their EPCs. Can we ask/check about the impact on the electricity bill? Yes I suppose we should! So potentially it would score higher for better energy efficiency, but then lower if it was green deal financed. I'm making a note to discuss with the directors now! And people ask why I'm on this site...it's perfect!

Do you want to be a non-exec director?? I could do with you on my team haha 🙂

Reply to the comment left by "Anon " at "13/09/2013 - 18:07":

Hi Anon

You probably switched of your PC several hours ago but for me, old habits die hard and I have to check in before going to bed, despite having a few glasses of wine so please excuse any typo's.

As I said earlier I loved your analysis of landlords. Your perception of forums was also interesting and I've been thinking about what you said all evening.

It's true that the vast majority of people leaving comments are seasoned professionals, however, we have noticed a change of late. Only today a student called Hannah posted a readers question regarding an issue with her letting agent. There have been quite a few posts from tenants over recent months and I welcome them as they serve to show us what we need to do as landlords and letting agents to keep our customers happy. Number one on Hannah's list was to receive an apology, see this thread >>> http://www.property118.com/our-flat-could-have-caught-fire/43426/

A key point you appear to be missing though is that for every commenter we have around 1,000 readers. We know very little about them. We have no idea why they read our forums, whether they are landlords, tenants, letting agents or just people thinking about getting into property as a form of investment. All we know is that they are watching us and reading our posts and i for one am very honoured by that.

The point I'm making is that Kirsty may well have a valid point. If these people own one or two properties or are considering their first buy to let investment they may well be interested in the star rating concept. I think your point about the route to market being letting agents is brilliant by the way. The people who own just one or two properties will often use letting agents. If we apply Pareto's theory to the lettings industry, i,.e 20% of landlords will own 80% of the properties, that means that there are still hundreds of thousands of landlords who own between 1 and 2 rental properties. If that is Kirsty's market then all she needs to do is to to incentivise letting agents to upsell their clients onto kirsty's star rating scheme and she may well be already on her way towards that tipping point, potentially a ling way down that road too.

As I said in a much earlier post on this thread, I will take a lot of convincing. That's because 25 years of being a landlords tends to make a person cynical and more difficult to convince. A newbie will go for pretty much anything if it is logical and advised by a respected mentor, i.e. their letting agent. It is if/when the newbies begin to go for star ratings in their masses that we need to be ahead of the game ourselves. In other words we need to be able to market ourselves and our properties at a higher level. As professional landlords we are highly unlikely to serve notice because we've decided to move into a property due to a crisis in our lives or worse still, sell it. We own multiple properties and we are in the business for the long term. It is for these reasons that we need to stay ahead of the game, making sure that our properties are better, that we are better educated and that we are better at marketing ourselves too. That's why I created The Good Landlords Campaign - see >>> http://www.property118.com/sponsor-the-good-landlords-campaign/

If star ratings do take off we will need to seriously consider embracing that as well as education based accreditation.

Only if NED comes with Stock Options ha! ha!

But, two more thoughts for the moment:

Do any other countries such as Germany (where Rental is more common than UK) have anything like you are proposing & if so, how does yours compare?

Will the likes of Newham cancel their Licensing Charges if a landlord has all of his properties with a star rating & will they then focus their efforts & fees on landlords who don't have star rated properties? This way, the scheme will offer the landlord an immediate & direct commercial benefit and support the declared politics?