Changing the way tenants rent rooms
Most HMO landlords will have realised in the last number of years how competitive the shared house marketing has become. A combination of HMOs becoming increasingly popular to investors due to their high yields, combined with increasingly demanding tenants, has caused a huge supply in stock. This is giving tenants a greater choice of where they can live, making it harder than ever to let rooms in shared houses.
In order to combat the increase in the supply of shared houses, landlords are having to constantly improve the quality of their refurbishments in order to attract the best tenants and keep rents high. It is arguably an interesting time in the shared house industry where landlords are either having to improve the quality of their refurbs, accept lower rents or innovate to stay ahead of competition. Obviously, there is a ceiling to how much you spend on a refurb for an investment, and landlords cannot keep spending anymore on our refurbs or the numbers won’t stack up.
Perhaps, there is another way to beat the competition instead of spending more and more on each refurb. I’m not saying don’t do top quality refurbs (otherwise you really will struggle) but perhaps focus not on competing over individual rooms and houses but focus on building a brand that tenants identify with and want to become part of.
Landlords can’t keep competing on quality of rooms and prices but should focus on delivering the ultimate renting experience to their existing and potential new tenants.
We asked the 200 + tenants in our letting agency, Relo, what would make them rent a room aside from just the high quality, which is now standard throughout our rooms to ensure our landlords keep rooms renting fast while attract higher rents. The basis of that survey has formed Relos new way of renting rooms.
We have been told we are either completely mad or total geniuses! We believe that this is the ultimate zeitgeist business model for HMOs today in response to the shifting HMO market which will result in rooms being filled faster and rents remaining high.
Growing our Community
Our core focus from day one has always been building a desirable community which tenants aspire to be a part of. We do this by bringing all our 200 + tenants together across all our shared houses as one bigger community instead of just one house with 5-6 tenants in.
For someone moving to a new city community opens the doors to a massive new pool of people to meet to get to know quickly and make new friends in more easily. We encourage this through tenant meet ups between houses such as BBQs, drinks in a bar and socials between houses.
What this has meant is that when tenants are looking for a room in a new city, Relo tenants know they get access to hundreds of other likeminded people they can get to know quickly and easily.
Each new tenant gets a welcome box with goodies in from Relo when they move in and we also drop off random presents, give tenants birthday cards and run competitions for our existing tenants.
No Fixed Tenancy Agreements
We introduced a radical switch to no fixed term tenancy agreements. We like to think of this as the Netflix of room renting. We don’t tie our tenants into 6 or 12-month contracts. This has hugely reduced the friction between choosing rooms for tenants as they know if they come to a Relo room, they have total flexibility if their circumstances change. This is the way the world is going, and Relo is embracing it.
Our 30-Day Rent Back Guarantee
To build on not having any form of fixed contracts, we wanted to sweeten the deal even further with the introduction of our 30-Day Rent Back Guarantee. This simply means if a tenant moves into a Relo house and it wasn’t what they expected, we will give them their rent back for the remaining period if they vacate within the first 30 days. This is just another fantastic reason to move into a Relo house. We will even pay them the remainder or their rent back if they choose to leave, so they are not out of pocket.
Total Transparency with Our Pricing
When we surveyed our own tenants, one of the most common concerns that popped up was the fact many letting agencies hit tenants with unexpected fees which were buried deep in the small print of their AST which obviously they never read properly.
Many letting agencies have found new ways of recouping the recently banned admin fees through other avenues. We therefore decided we would be completely transparent with our pricing structure and guarantee Relo tenants will only ever pay one monthly figure set out from the start.
Not Taking Deposits
The feedback we got from our tenants was the cost of moving was so high and many would consider taking rooms based on cheaper rent or lower deposits even if the room wasn’t as nice, so we decided to scrap deposits all together. We found an insurance backed scheme that allows us to claim if there is damage to the room, significantly reducing the cost of moving to a Relo room over others.
Taking our Advertising off Room Rental Portals
With most investors and letting agencies advertising on room portals such as Spareroom, we were finding it increasingly hard to attract the numbers of tenants we had been seeing previously due to the increased number of rooms being advertised. We therefore made the fairly drastic call to take away the majority of our advertising from these rental portals and focus on pushing potential tenants to our own new website with our own built in room search. We push them to our website via paid digital marketing which we have yet to see anyone else doing.
So, this unique business model means that Relo now has a long list of tenants wanting to rent rooms through Relo. We have stopped competing against other investors on the quality of rooms and we have actually increased our rents because of it.
I will leave it to you to decide if you think this is crazy or not, but we truly feel the rental market (not just for HMOs) needed a shakeup. We believe focusing on providing the ultimate renting experience for tenants is the way forward. It might seem extreme, but we know it’s working for us and we think this is going change how tenants rent in the future. The industry is changing, and so is the future of renting rooms and Relo is leading the new way of renting rooms.