Guest article from proptech specialists Payprop
There’s no time like the present for letting agencies – particularly those in the student rental market – to review their payment systems
This is becoming increasingly important for managing arrears, proving transparency and streamlining business processes amid tight industry competition and economic conditions.
Beating rental arrears through automation
Some agents or landlords may be wary of letting to students due to the perception that they are more likely to fall into arrears because of their financial circumstances. This is not entirely unwarranted.
Research by Housing Hand shows there has been a huge jump in the number of student tenants applying for a guarantor, due to rising rents. Meanwhile, the Deposit Protection Service recently reported that rent arrears remain among the most common reasons for deposit deductions across all tenancies.
However, PropTech provider PayProp says that agencies could keep on top of any rent arrears by taking a pro-active and systems-focused approach to payments.
“Seeing the live status of a portfolio via an automated system can easily show you which tenants are in arrears in real time,” says Neil Cobbold, chief operating officer of PayProp UK.
“These tenants can automatically be reminded via SMS to pay their rent. Research shows around 90% of text messages are read within three minutes of receipt, and 64% of tenants in arrears respond within 48 hours of being reminded. Automating arrears management processes could save agents and their clients thousands of pounds each year,” Cobbold says.
Transparency is becoming crucial with more regulation
The private rented sector is becoming increasingly regulated, and agencies that provide business transparency will find themselves in a stronger position over the next few years.
“With incoming laws requiring mandatory Client Money Protection scheme membership and banning up front fees, it’s vital that agents can easily prove their transparency by producing a record of all incoming and outgoing payments at the touch of a button,” Cobbold explains.
“Digitising and automating the payments process is the only way to do this effectively while making your business more efficient and profitable at the same time.”
Streamline your lettings business
Letting agents still relying on paper-based or manually-managed payment systems can further save time and reduce the margin for human error by automating their business processes, PayProp says.
This is especially true for agents with high transaction volumes, who can bring payment processing time down from hours to minutes, allowing them to spend more time on managing other parts of the business.
“An automated payment system simplifies and reduces an agent’s workload and streamlines their processes,” adds Cobbold.
“For firms working in the student rental sector – where large numbers of payments need to be processed, often from separate tenants living in the same properties – this could completely revolutionise an agency’s business.”
“The right payment automation platform can match rent payments to the right tenants and pay all your landlords on the day rent is received – no matter how big or small your portfolio,” he concludes.