08 February 2019 | Tom Mundy, COO and co-founder of Goodlord
Generation Rent expects a digital-first experience from every single business or service they interact with - which includes letting agencies. Meeting this group’s expectations is going to be crucial for letting agents in a rapidly changing and increasingly competitive environment, which will be exacerbated by Tenant Fee Ban coming into effect on 1st June. Agencies are expected to lose up to 20% of their revenue and will need to look for new revenue streams to plug the gap, which means selling products and services to their tenants will be necessary to survive.
The number of tenants which agencies will be able to monetise is growing. By 2021, a quarter of the population in the UK will be renting. This group, which has become known as Generation Rent, spans several generations, but is dominated by millennials and their even younger counterparts, Generation Z, with more than half of those in the 20-39 year old age group expected to be renting within the UK by 2025.
These are digital natives who have grown up in an on-demand world, where they can fulfill their every desire with a few swipes on their smartphones, from buying a new wardrobe that will be delivered the next day to booking a flight and AirBnB in New Zealand for the following week. A host of on-demand services has also begun to emerge that are aimed at renters, from TaskRabbit, which lets customers hire help for small jobs around the home to Feather offers a furniture-subscription service.
Understandably, then, this group has very high expectations from the businesses and services they interact with, and these expectations are getting higher all the time. Sixty-six percent of 18–34-year-olds say they have higher expectations for customer service than they had a year ago. However, they are also willing to pay a premium for products and services that will make their lives easier, with 43% of consumers saying they would pay more for convenience.
This means that letting agents will not only need to offer products and services that make Generation Rent’s lives easier - whether that is moving home or on an ongoing basis - they’ll also need to ensure that the purchasing process as simple and convenient as possible in order to increase their conversion rates. Get it wrong at your detriment - one in three consumers (32%) say they will walk away from a brand after a single poor experience.
Technology allows letting agents to not only participate in the on-demand economy by turning their application or property management portals into online stores, but actually reduce the cost of selling these products or services to tenants at the same time. Letting agents can already make use of this technology by including options such as utility or broadband switching services during the online application process, which tenants can purchase with the click of a button.
But this isn’t all. Vaboo’s Renter Sentiment Index found 70% of tenants would also be willing to pay more for access to extra services or an ongoing basis, which included everything from access to a gym or cinema to a communal workspace. This means that, in the future, letting agents could extend their offering to include a more diverse range of services that not only make moving easier, but enhance their tenants lives while they’re living at the property and make them more likely to stay longer - and pay you even more.