Workman Partner Julian Bates calls for “more sophisticated techniques” for measuring managing agent performance in response to Property Week’s article of 7 November entitled “Property managers urged to adopt new business models”
The Property Week headline on 7 November was a striking one, reporting on data released by Remit Consulting which argues that property managers need to “do the basics better, and change the way they treat tenants if they want to remain relevant”.
As the UK’s largest independent property management and building consultancy firm, we wholeheartedly support this notion – a focus on delivering the fundamentals of property management and ensuring occupier satisfaction is at the heart of our business. Put simply, it’s what we do.
The Remit report moves on to question the due date rent collection statistics [which paint a national picture of consistent underperformance], with Steph Yates, senior consultant at Remit, commenting “this amazes us time and again. If 20% of people didn’t pay their mortgage on the due date, they could lose their house”*.
In simple comparison terms, it’s an easy connection to make, but as Julian Bates, Partner at Workman commented in the piece, “the past few years are not the best measure of performance”*, particularly in retail, where “property managers face challenges beyond their control”*
How can landlords develop a clear picture of managing agents performance in these circumstances? Here, Julian Bates adds a bit more detail to the debate and counters that rent collection alone presents an unhelpfully narrow view.
“Rent collection statistics based on due date collection can be a useful measure for Managing Agents’ performance, but provides a very limited view of the debt profile. Historic pre quarter debt is often as useful a measure of performance particularly with the proliferation of CVA’s and service charge consultants both of which can slow down or even stop the flow of funds.
Indeed, we would counter that where industry has typically relied on due date collection as a key performance indicator, historic debt is far more relevant. Total arrears debt collection, which includes pre-quarter debt, can have a bigger impact on landlord cashflow.
Bringing historic debt down to a minimum can bring significant benefit to the landlord’s total risk profile and in recent years, we have been building up our credit control team with total arrears management in mind, reflecting the market we are operating in.
A positive and clear relationship with occupiers does demonstrably make a difference to recovery here so it is important that at all touch points the landlord’s agent is seen as good to deal with.
More sophisticated techniques need to be used as part of a suite of measures to build a clear picture of a Managing Agents’ performance, if landlords are to identify the top performers. These do not need to be overly extensive but ideally need to link back to the landlord’s own objectives thereby ensuring service is clearly aligned and performance measured.”
*Reference; Property Week/ Legal, Prof & People, 7.11.19 https://www.propertyweek.com/legal-and-prof–people/property-managers-urged-to-adopt-new-business-models/5105074.article