I am joined on the show today by James Davis, who is the Founder and CEO of Upad, ‘the UK’s leading online agent’. James really did develop Upad out of frustration based on his personal experience of the lettings industry as a landlord of many years. He has a philosophy that also serves the majority of UK landlords, who either self-manage or use agents for tenant find only services. A literal databank of statistics and information is shared through our discussion, which illuminates why we should take notice changing patterns in our environment but can use technology as a response to these changes too. Some great nuggets of how to use alerts to gain insights, how we can cut costs with tenant finding and some tips on how to create ‘standout’ with our property listings are just some of the highlights.
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Transcription of the show
Hello, and welcome to another episode of The Property Voice podcast. My name is Richard Brown and it’s a pleasure to have you join me on the show again today.
I am joined on the show today by James Davis, who is the Founder and CEO of Upad, ‘the UK’s leading online agent’. James really did develop Upad out of frustration based on his personal experience of the lettings industry as a landlord of many years. He has a philosophy that also serves the majority of UK landlords, who either self-manage or use agents for tenant find only services. A literal databank of statistics and information is shared through our discussion, which illuminates why we should take notice changing patterns in our environment but can use technology as a response to these changes too. Some great nuggets of how to use alerts to gain insights, how we can cut costs with tenant finding and some tips on how to create ‘standout’ with our property listings are just some of the highlights.
Let’s have a listen to my conversation with James right now…
Property Chatter
Transcript of my discussion with James Davis from Upad
Hi everyone. Once again I’m delighted to welcome a really special guest again today, it’s James Davis who is the CEO of UPAD. James, first of all, hello, how are you?
James: I’m very good thank you very much for welcoming me on to your podcast today.
Richard: No. it’s a pleasure, thanks for joining me, I appreciate it and I’m looking forward to the conversation and where it might go. We’ve framed this as talking about systems apps and technology. I know we might just drift based on the preamble conversation that we had but I’m looking forward to where that might drift to. What might be useful James. if you wouldn’t mind, is just to set the scene a bit, perhaps a little bit about you and maybe how your background probably sprung into UPAD and what UPAD is. Would you mind just taking us through that for a minute or two?
James: No, absolutely fine. Very happy to do so. So, after finishing University up at Manchester I went to London where my parents live. I told my Mum and Dad I was going to buy a house and then I was going to get a job. My Mum looked a bit puzzled. Anyway, I managed to persuade the bank to lend me the money based on a business plan I did just a year before buy to let mortgages came out. And that got me on the road I suppose accidentally as a landlord. I let out four rooms in the property on a posh student house type basis. I’ve now built up a portfolio in London, North West London where I live and it’s where I know and also in Swansea and I’ve been a landlord know for about the last 18 years or so and I think my frustrations of being a landlord is what gave birth to UPAD years ago, in the sense that I was using channels to sell stuff, like Gumtree, I found the quality of tenants quite poor. I now know that it takes on average four gumtree leads or tenant enquiries to every Rightmove lead to let a property and if was going to use a traditional agent, I have my own tenancy agreement and I’d rather do the viewings myself. Interestingly, nine out of ten tenants would rather meet the landlord on a viewing rather than an agent, so you put yourself on pole position if you follow down that particular route. I didn’t think there was an alternative between those two extremes and that’s what gave birth to UPAD to being an online agent sort of resource for landlords who want to self-serve in a similar capacity to myself.
Richard: Thank you. That’s amazing that you managed to persuade the bank to back your business plan idea. I wonder if we’d get away with that today…
James: Yeah quite. I think it’s more about how much you spend on Chateau Neuf De Pap rather than the supply of tenants are in your locality, but you know, the market is where it is. What I do think is interesting though, is I think we are professionalising a bit and I’m sure we will come on to it in terms of the amount of landlords that are incorporating currently, but it used to be the case that having debts, mortgages through limited companies was always quite a massive premium but we are seeing the rates for commercial mortgages if you’ve got a limited company set up coming more in line to what it is if you let individually now. So, the market is developing in a good way I think but yeah it is different to what it was eighteen, nineteen years ago.
Richard: Perhaps if I can take that as a bit of a tangent actually, because we’ve had a lot and I know you’ve spoken about this as well, a lot of legislation thrown at us over the past couple of years and quite a lot of that legislation apart from being bureaucratic has also had a financial bearing on landlords, notably section twenty four (S24). which is starting to bite but hasn’t perhaps woken everybody up yet and that’s maybe what’s partially behind the drive to incorporation or setting up a limited company as you suggest. So, where I think maybe that, it’s not so much to have a moan about, that I wanted to have this conversation, it’s more about, how can we respond, you know, as landlord investors and UPAD is an example of a response to that as indeed incorporation is, so are you seeing some trends around the responses to the current environment that we see ourselves in?
James: Yes indeed, I think what we all need to bear in mind is that the world is dynamic. What I mean by that is that if you, many years ago, used to used classified ads in a local newspaper or Loot to look for your new tenants, clearly, there’s been a big shift online in terms of tenants. Ninety-two per cent of all tenants are looking online for their next rental, so that part of the market has changed. Clearly legislation, George Osbourne, who I’m assuming is off everybody’s Christmas card list this year, introducing mortgage interest relief a couple of years ago. What I think is important is this devil in the detail bits. I suppose just touching on this particular bit, I think what frustrates me, or one frustration I have is journalists over the last six months / twelve months have been talking about, oh all landlords are going to incorporate their portfolio on the back of mortgage interest relief, but it’s all the devil in the detail and I’m a semi-frustrated accountant but parking that, if you are taking a portfolio or individual property that’s in your sole name and putting it into a limited co, there is a change of ownership and that creates a stamp duty charge and we talked a little bit earlier about the fact that rates for mortgages through a limited company are, they’ve come down but they are still more than what it is for an individual and so you need to take all of these things into consideration, what it means for your portfolio and also to where you want to go with it. Are you looking to sell up in the next year or two or keep your portfolio for the next ten or twenty years? And all of these considerations need to be put into this melting pot as it were. So, I guess I get frustrated when journalists say landlords are all going to incorporate which ignores the fact that there are pros and cons to all of this. It isn’t necessarily the right thing for all landlords concerned but I think it’s important that in both these examples, mortgage interest relief and the effects of, and this drive from tenants looking online now for their next rental that we adapt to the marketplace we are in and understand what it will mean for us in the coming years. You may or may not want to touch on this but as a rental market there’s a growth of families looking to rent and there’s a growth of singletons renting. What property do we let out? Who is that serving? Is that a growing or a shrinking market place? Where do we need to adapt? I think it’s important that we keep the finger on the pulse and what’s happening and apply what these changes mean for our own portfolio and adapt accordingly rather than just doing what we did the year before and the year before that, where I think you are just going to fall into areas of concern if you put your head in the sand as it were on that, if that makes sense.
Richard: Makes sense to me. I have these sorts of conversations, I wouldn’t say daily but very frequently and people say ‘should I set up a limited company?’ or something to that effect. The answer is always ‘it depends’ and by the way, I’m not a tax accountant, so I can’t give you advice but just in my own portfolio for example I’ve got such a mixture of different arrangements and ownership structures and future plans and backward plans with properties. It’s not a one size fits all, but what I do agree totally about is this ability to adapt and that’s a part what we are talking about today is some of the adaptations, the trends that are coming in. I was curious to hear your view on changing tenant profiles with families and singletons. Perhaps we could just take a little drift into that for a second.
James: Indeed, I think that’s what us landlords need to do. It depends where your properties are, what part of the country and so on but I think what is useful for a variety of reasons is to understand the space you operate in, So, Rightmove and Zoopla for example, both have the ability to create an alert and these alerts are generally for tenants and buyers to be kept informed of new properties as they come on the market. I also think they are very useful for us as landlords to understand the locality that we operate in. So, in Swansea for example I have properties in SA1 and SA5. I have alerts set up for those two postcodes for two and three bed properties, so I can keep an understanding of what’s coming up in my locality. What’s happening with pricing, what’s happening with the presentation of properties, the quantity of properties that are coming on the market and so on and so forth. So, over the course of a twelve-month period for example, I can have a really good understanding of what’s happening, whether it’s becoming more competitive, are prices going up and so on and so forth. And then that will lead into you having an understanding of what’s happening in your locality not just relying on what’s being said in the national news but what happens for your particular portfolio. And I think it’s really important that we understand what is happening for our own situation rather than what is just happening on a national basis. It’s got to be relevant to us. What we all know about is that the amount of people per household is going down. We touched on this earlier than the two largest groups of tenants now are singletons and families. I suppose just a couple of things I want to flag on that with families, over 50% of all families have a pet, generally a cat or a dog, which are generally no gos from a landlords perspective. Most landlords don’t want to let a property with a pet. So, use that to your advantage perhaps. Say that you are pet friendly, because you are putting yourself in pole position over all of the majority other properties that aren’t going to be pet friendly. You can protect yourself by taking a higher deposit, ensuring the property is professionally cleaned afterwards and so forth, you can protect yourself from it all. You can charge a premium because on a supply and demand perspective, there is a lot of demand from tenants with pets, as families, but very little supply, so you can take those considerations into account. Then on the singletons side of things, singletons want their own space, they don’t necessarily want shared accommodation, like it was when I started as a landlord years ago as we talked about a bit before. But what they want is their own space, less probably concerned about the size of it but more about having everything in one place so that means their own shower room for example, having their own kitchenette, fine about using shared washing machine facilities and so on and so forth. WiFi, in particular, will be exceptionally important and it’s not just about saying that you have WiFi. It’s probably more relevant to say that the speed of the broadband is XY and Z, as I think it’s given that you have WiFi, it’s more about what the speed is so I think we need to be aware of how tenant types are changing and what their needs are and we need to reflect that. With all my properties in London I actually offer free WiFi included within the rent. Now I may or may not charge a premium for that but when you are advertising a property to say that there is free WiFi included and unlimited and its fast you are putting yourself in pole position over all other properties because much to my wife’s annoyance WiFi is essential, yet we move into a new property, the gas, the electricity, the water is all functioning but it can take several months to get your internet up and running and if the average tenancy in the UK now is about fifteen months, it’s quite easy for a big proportion of that tenancy taken up getting WiFi sorted out and making all those phone calls to suppliers to get them up and running, I’m using that to my advantage, I’m making it available free of charge as it were on day one and making my properties more appealing than others in the marketplace so maybe that is food for thought for everybody listening today.
Richard: Totally agree about how you’ve come at this. What I like about this is you’ve really come at this from the benefits angle. So, how can I use this to my advantage, how can I make this appealing to the tenants this sort of thing but the input of that is using technology as your research tool. So, you talked about setting up alerts, search result alerts in the portals so, everyone’s used to using the portals and obviously it’s a case of perhaps role-playing as if we’re the tenant. So, set up a search with criteria as if we’re the tenant to find out what’s going on in a locality and I really like that as a tip. By the way, just a bit of a tip, to UPAD in preparation for this. I’ve got a property where the tenants just served noticed and they’ve been with me a lot longer than your average actually. They’ve been really good tenants, they’re moving on, they’ve outgrown the space and well they’re just moving on. So, I noticed that you have a little rental calculator, I just had a little play with that and it’s quite handy that you just gave me a minimum, a maximum and an average for my postcode area and by the way, it’s pretty accurate.
James: - Thankyou. We’ve built a few calculators actually. Because, yes, there are ones that fit for calculating your rent but it is interesting and we talked about this earlier, we built a calculator that calculates what the effects of Mortgage interest relief will be over the four years
when this comes into play. And the reason being is, there was so much earlier when we were talking about generally saying that landlords need to incorporate but it’s interesting to understand what this means to you. If you put in what your mortgage amount is, what your interest rate is, it will calculate what your additional tax will be. Which is the four years when this new change comes into play. You can access it by going to our homepage and scrolling down towards the bottom. It’s probably the easiest way but we’ll send a link out for this calculator to go with this Podcast afterwards. But the point of generating this is to understand whether that effect is going to be a two hundred pounds additional charge, or the other end of the spectrum. If you have a seventy-five percent loan to value mortgage [and are / will be a higher-rate taxpayer], it is likely that your entire profit is going to be wiped out by the time this tax change comes fully into play. My concern here is that a lot of surveys that landlords have been involved in, not just ours but through the National Landlord Association, a lot of landlords feel that they’re just going to cover this increased cost by increasing their rent. But I feel, this is a different opportunity, say compared to when the price of oil increases, petrol at the pump increases. And what I mean by that is if you were to increase your rent by twenty pounds a week to cover this tax charge. Where I think you’re going to fall over is that every other landlord in the UK doesn’t have any debt, only about fifty percent approximately of landlords have mortgages so the next property that is available can carry on charging the same rent and in affect, what you’ll end up doing is pricing yourself out of the market. Driving higher void periods, as you try and reclaim this additional cost for your higher rent. So, these calculators are useful to give you an understanding of about what the effects will be but don’t just assume, ‘oh, I’ll just put that cost onto my tenants’ because it could have a detrimental effect on your competitiveness in the market. Why would someone rent your property when if it’s ten percent more than others that are similar in your locality? Just be aware of the effects of things like this for example.
Richard: Yeah, so we’re now plugging some technology resources that can act as prompts or inputs to help make better decisions. And that’s another example. One of the spin-offs that you talked about is the potential solution to mortgage interest relief being taken away, particularly for higher rate taxpayers and to seventy-five percent to value borrowers or high low to value investors, is that, we have to respond to that and maybe putting the rent up as you say is not even possible. One, because of the competition. But second of all and I know you might want to talk about this, is about affordability. Can the tenant afford the increase? It’s all very well saying ‘let’s slap twenty pounds on a month or week whatever’ on the rent but can they afford to pay it? And are we stockpiling a problem for ourselves if we just adopt that approach?
James: I think this is a really interesting area. I think it’s going to be one of the biggest issues that affects all of us landlords going forward. And what I mean by that, is the proportion of someone’s take-home pay of someone who’s paying rent is on a national level approximately thirty-four percent. Interestingly for those of us with mortgages, the average amount that we spend on mortgages of people’s take-home pay is around twenty-five percent. So, it’s really substantially more that goes on rent than if you’ve got a mortgage. But, there is this sort of point where it is advised that your tenants’ rent makes up no more than thirty, possibly forty percent of their taking home pay. The second it becomes more than that, their affordability comes into question. So, we’re already at that point where we’re at the top end of it from the affordability perspective. We know that rents are increasing at a faster rate than salaries and we know that some landlords are going to sell up because of mortgage interest relief which further drives supply-demand disequilibrium, which again will drive rental values up at a faster rate. So, you’re almost fueling that percentage going way over forty percent by adding more onto it to cover your higher costs. I think the bigger area for us landlords is that it will simply lead to bigger rent arrears which is a much bigger problem. I’d much rather have an empty property than a bad tenant or someone who’s not paying their rent and we know last year that rent arrears affected about thirty percent of all UK landlords. And I think this is going to be the biggest area of concern for us as landlords going forwards. So, the idea that we can just add cost onto a higher rent is very naive and we’ll face a much bigger issue for us down the line. I’m happy to explore this more but I think rent arrears is a really big issue. I would much rather be receiving eighty percent of what the maximum amount of rent is that I could, than having a few properties where tenants simply cannot afford it and then we have to go through the whole eviction process.
Richard: Yeah, I do think it’s an important area and I’m just trying to think back to the links and the core of what we’re talking about. I will probably ask you about app systems and technology more directly but we’re kind of touching around the edges and I just wondered if there were ways we could keep abreast of that. I don’t know if you do this yourself James; I look at average salaries and average rents and have kind of a rough idea, but you know this is more general view and it’s not my property or my area type of view. I don’t know if you’ve got a way of doing that but stretching affordability is definitely a hot topic and an area to watch out for.
James: It is and whilst companies like Experian and Equifax are starting to build up a better understanding of tenants’ financial profile in terms of rent and being paid on time, being included in their credit referencing. We’re still a long, long way off an automated or text solution that allows us to have a solid understanding of our tenants financial profile. I think that’s partly because the market’s become more complicated, so we are in a world where most people have unsecured debt, the average household has nearly ten thousand pounds of unsecured debt; be that credit cards or personal loans and that can obviously affect somebody’s affordability. They may be paying thirty percent of their take home pay on rent but at the top end of the amount of unsecured debt on their road map, that can have a detrimental effect on their affordability, but it doesn’t necessarily show it up. We are all in this world of ten pounds a month going on Netflix and so on and so forth, you know the Ubers and so on where we don’t physically hand out money for services or goods that we’re buying which makes it a lot easier but it also probably encourages us to spend money. There are various people we’ve done focus groups with that spend a huge proportion of their salary on services and goods they just not simply paying for visibly; on the Deliveroos, the Ubers, the Netflix’s of this world. And I guess where I’m going with this is that your potential tenants financial view is struggling, how one does that unless you see the last three months bank statements, because it’s become far more complicated and there isn’t a one stop shop where you can, you know it’s almost like their bank statements being scanned in at one end and out at the other, it says that their affordability it poor, medium or good. Which is where I’d like it to go to, but I guess it’s become far more complicated which is hampering technology having a role to play in that particular bit. Although, we are seeing the Experians of this world including rent into people’s credit profiles which is positive as far as I’m concerned.
Richard: Yeah and I think the credit profiles will be interesting. I think my immediate thought on that by the way was that only the absolutely A1 payers will volunteer to have their rent shown on their profile. They may not have a choice at some point, but I think, if it’s voluntary you know it’s only going to be the A1 credit rating people who get shown up and people who have a bit more of a flakey financial past might not get their information displayed.
James: Here’s the thing. When you’re doing viewings on a property and there are maybe five people interested in it, you're almost picking someone on their gut feel factor, what rent their offering, if they seem nice and so on. But what you’re not aware of is their credit rating, whether they’ve got CCJs until you’ve particularly chosen one. So, it can be the case then that there was somebody else with a better score, or a better affordability. So, I think where I see technology having a role to play, is when we’re getting inquiries from tenants if not just a quantity thing, it’s quality too and I would much rather only have tenants enquiring about my properties, so that I know that they can actually afford it. They’ve almost been pre-screened from an affordability perspective, not just a two-minute chat on the phone and I think that would be an interesting area to see where things go to.
Richard: Totally agree. And I think the whole tenant referencing landscape can play a part in that certainly as you say. If we can streamline the process and make it a low-cost search criteria, that will certainly be handy for all of us. What I did want to do. Can I perhaps just, I had in my head that when I was going to talk to you James, that we maybe have one or two avatars, so we can talk about. Obviously UPAD is targeted at landlords who don’t mind or are happy to do their own viewings. One of the responses to the increased cost base that we’ll face over the next few years and we are starting to see already, is to reduce the costs of our service. So, you could increase rent, you could incorporate, there are various things you could do and one of them of course is to reduce cost. My understanding is that you’re offering enables people to perhaps do that. You know, reduce cost angle but in addition to reducing cost and not having branches and this sort of thing. As far as I understand at least, you don’t undertake the viewings that’s the landlords domain. So, if we’ve got this landlord who’s happy to do their own viewings and perhaps an element of self-management, what sort of apps, systems and technology could they potentially leverage this particular avatar of landlord?
James: Okay, so there’s a couple of things there that are worth covering up, the large majority of UK landlords do it themselves, half of all UK landlords self-serve on things like Gumtree or what have you and do it. And of the other half of landlords use an agent; the vast majority is a let-only basis rather than fully managed and we know that over forty percent of all tenant enquiries come outside of opening hours, yet most traditional agents are only open nine till five so there’s a imbalance there in terms of when a traditional agent is available for viewings and when the tenants are wanting, so the landlord is getting involved because it’s an evening or weekend thing, which isn’t rocket science I wouldn’t have thought to anybody. You can use this very much as a resource for landlords to self-manage, you can pick and choose as much or less of it as you want. If you just want to self-advertise your property on Rightmove and Zoopla, which is where ninety two percent of all tenants are looking for their next rental and that’s fine, you know we charge one hundred and twenty pounds and all in all away you go. But I think very much with this resource and just a couple of statistics on this, is that UPAD is on a third of the cost of traditional agents and yet we successfully let a third more properties than the traditional high street agents. So there’s far more of an effectiveness in UPAD and at a much lower cost. So, what we try and do is take landlords on a journey where if you just want us to advertise, that’s fine, if you want us to do all the paperwork because you’re unsure about whether saying ‘no pets’ in your tenancy agreement is legally permissible, which it isn’t incidentally. We will do that for you but it’s almost an ‘a la carte menu’. You choose the bits that you want and we will help you through the journey. And there are various alerts that we have to set up at this end, to help you and I suppose one that I’ll just finish on and one is that as a landlord and because of the way the market operates. In that most tenants have these alerts on Righmove and Zoopla setup as we talked about earlier as being useful resources for us as landlords. What that means as a landlord is that as a landlord, when you put your property on the market, you get approximately one third of all of your enquiries within forty-eight hours from when a property goes live. What that means is that we have some sort of understanding therefore from the forty-eight hours about whether you’re going to let your property or not, because if you’ve only had two enquiries in that time, it’s unlikely that you’re going to let it and we’ll help you improve your ‘stand-out’ factor of your property to make sure that occurs.
Richard: So, there’s an example of where you’re using data and some rules effectively to predict outcomes. So that’s obviously advancing us. What I was thinking with the questions was...obviously UPAD is there, so this avatar they’re perhaps going to use something like UPAD and obviously other online agents are available; I have to say that as you probably appreciate. But then, in addition, they’ve got property management let’s say. So, a traditional letting agent might offer a full package for a tenant find and property management but are you aware, and I’m pretty sure you are, of any technological tools that people, landlords can use for property management?
James: Yeah, so there are quite a few companies out there now that have apps or platforms or things dealing with maintenance requests. As a landlord, as I’m sure everyone listening knows, is that on average, we get five instances of repairs over the course of the year. And the majority of those are to do with gas or electrical repairs and there are various tools out there that can improve your communication with you and your tenants or agencies and tenants and you know there are a few that I can mention. But the bit being, is that if there’s just a better way of you being informed that the boiler pressure is below one bar for example, I would question, so what? My tenants communicate through SMS or WhatApp or email or calling me. Why do I need another one that can help in that particular bit? The tricky bit that nobody yet has answered yet is the cradle to great solution, where it’s not about the reporting of that boiler repair, but actually getting it fixed as well. And yet, I don’t need another system for my tenants to communicate with me, I have enough means on my computer for example for tenants to reach out and I don’t need another one. And I suppose where I’m going with it that the rental market is quite complicated compared to sales, especially due to repairs and so on. Therefore, I think the quantity of tech that is involved in the rental space is unfortunately quite low. And those where there is some tech it’s almost that easy bit of reporting faults better and I’m like ‘so what?’, you can send photos through WhatAapp and Facetime to look at some leaky guttering for example. So, I think unfortunately, from my perspective, I think it’s still a manual process and we still need that bank of professionals around us to help manage our business on a day to day business rather than an end to end tech platform.
Richard: Mmm, I’m aware of some technologies that allow us to do that. I have an agent who uses some of this technology and I’ve got a tenant who I communicate to directly on WhatsApp, so we have a direct communication already. He can show me photos, videos etc. of issues in the property and I’m just saying, but you need to kind of follow the system with the agent and report that and he keeps saying ‘well they keep sending me this thing where I have to report all my maintenance issues through their app and I don’t know how to do that and I don’t really want to do that.
James: A lot of the tools that are out there, so even from an accountant perspective, there’s all of these solutions for managing our portfolio better, that are plugged into Sage and the rest of it and it’s like Jesus, the vast majority of landlords don’t even put stuff into Excel in terms of running things as a P&L account. That doesn’t mean that we need to go to completely to the Nth degree as if we’re running a multinational organisation with various subsidiaries. There’s a real lack of usable resources that fit to what landlords actually want in this day and age. And picking up on what you said, doing FaceTime with my builder in Swansea on some guttering that was leaking or some tiles that had fallen off, works absolutely perfectly and I can get a really good vibe and it works a lot better than some these apps and tools that are out there. I still for my own portfolio, am operating in that capacity instead of using things like Arthur for example.
Richard: I mean yeah. I think it’s unfair to pick on one particular technology, but I think there is this one technology called WhatsApp and it’s free and it hasn’t been with us a long time but it’s incredibly useful and a lot of people, especially tenants like it because it’s free and it’s easy to use etc. so it serves us well as a communication tool so we have instant feedback. I’m curious as to what you said because you’ve got a property in London, but you’re obviously in Swansea. So, how do you do your viewings in Swansea?
James: So, to be fair, I live in North West London, so it’s quite easy to get the train up from Paddington to Swansea. I have a small building firm that works for me down there that sort things on a day to day basis. But I think that it’s important that all the tenants know me. You know, one of them messaged me this week to let me know that rent was going to be a day late because they all know who I am, I go down there several times a year and I’m the direct report as it were. I then forward things onto the builders to fix as and when but I’m still active within that bit and you can work on the train so that doesn’t really, necessarily bother me.
Richard: Mmm, that’s interesting and that’s a certain ethos that you have. I for example, have properties in four countries so it’s not quite so easy to do what you do, so I rely on local support quite a lot. Have you heard of a company called Viewber?
James: (laughs) Interesting, they just emailed me having a bit of a chat about opportunities there. I think what we have to remember is that the vast majority of landlords self-manage and are involved in some or all of the process. It’s a very small percentage of properties in the UK that a fully-managed, certainly in the more institutional play and also into prime London. I’d certainly wear my UPAD hat. What we need to make sure of, is that any services we offer, any products and any tools; calculators we mentioned earlier on, are built and put forward on who landlords are in the UK and there are some like yourself where you can’t travel round four different countries on a quarterly basis doing inspections but I think it’s important we remember who the majority of UK landlords are and how we manage our portfolio.
Richard: Yeah so you’re playing the 80/20 game there a little bit, I get it. I’m conscious of time a little bit James so one of the things we talked about before we got into it and I perhaps we touched on it a little bit but we hadn’t gone into it in great detail, is perhaps the use of technology tools in terms of marketing or thinking about marketing and properties. You’ve got some thoughts on that haven’t you?
James: Yeah. I think it’s a variety of things and to be fair we do webinars on the marketing side of things and I think what would be helpful is what we’ve covered in this session, we’ve talked about various calculators that are useful to understand your financial picture for example mortgage interest probably comes into play, we’ll share that with you so that everyone who’s listened can have a play with it in the coming days so they can understand the effects of their business. We talked about the rise of rent arrears in the bigger picture thing. There’s a couple of documents I’ll share and flow charts on how to evict the tenant and the processes you need to go through. It’s more about trying to reach an amicable solution than trying to go through the process, so I’ll share that with everyone listening today. So, on the marketing side, there’s a really useful guide that we have and I suppose a few top line data points to mention that hopefully you can just think and reflect on. Ninety two percent of tenants are looking online for their next rental, over fifty percent, fifty six percent is the actual figure, of tenants are looking on mobile apps look for their next rental. I recommend doing a direct search on the Rightmove or Zoopla app yourself and see how it works, what you’ll see is that ninety odd percent of the screen is taken up with images and therefore photographs of your property is actually your shop window that people see and to avoid tenants swiping through to the next one and really utilising that image to the best of your ability. Having amazing photos and dressing your property, creating that show home look and also using a SLR or digital camera so that your images look amazing because clearly the screen quality of phones or iPads has gone up dramatically over the years. But that’s your shop window to make an impact in two seconds as your kind of just flicking through so work that to your advantage. And I think the final bit that I’m going to mention is that you know, more of it is coming up in our guide. Is about how you create standouts, it’s more about pricing, about how you stand out compared to all the other properties on the market. We started talking about alerts on Zoopla and using them to your advantage. I would recommend everything that we’ve been talking through and taking all these considerations into account to make your property look better, more impressive than the others on the market. So, when tenants are flicking through and they come across yours or find what they’re wanting before anybody else’s and I think we have to remember and need to reflect on is the physical viewing is more about confirming what they’ve seen online and meeting you is important. And the viewing has almost become an online experience now in the fact that you can do Google StreetView and so on and so forth. We need to be putting a lot of experience into that because that is our shop window and will share with everyone listening to this podcast.
Richard: Yeah, thanks. I think I’ll share with you embarrassingly, a story. My twenty-two year old niece, I’m talking to her up about buying her first house and I said ‘oh right what are you looking to buy?’ and she just whips out her phone and says ‘that one.’ And it’s her Rightmove app and it’s on her phone and I’m flicking through the photos exactly as you say and of course there she is, somewhere between millennial and Gen Z and she’s just looking on her smartphone because I’m pretty, well I couldn’t call myself tech savvy but I use technology quite a lot, but mainly online. But it was a smartphone thing and fifty six percent of people are using smartphones to view properties, that’s the stat that you just quoted which was a surprise to me. And I think there are probably more landlords or landlord investors who are not aware of this technology.
James: - I think also, exactly, I think as well as how your property looks, we almost need to think ‘okay, so people are using the app, they’re probably doing it on the train back home for the weekend and we know that forty one percent of tenants are enquiring after office hours which means when tenants do enquire about a property, whether that’s eight o’clock at night or a Sunday morning, as much to the annoyance of my wife, I’ll reply back speedily because they’re in that zone of looking for their next rental, which is really important to revert back whilst they’re in that zone because the following day or in a few hours, they might be driving or in a meeting or maybe have a few other viewings in their diary. One shocking statistic for you is, I was invited to present at Rightmove’s conference talking about the future of letting space, it was in Milton Keynes and I mystery shopped ten different agents on a Saturday morning whilst I was putting my slides together. Just to get a feel as to what the Milton Keynes environment was like and I was absolutely shocked actually. It’s where I’m completely shocked, that the ten properties I enquired about, seven of those agencies never came back to me. They didn’t email, they didn’t call EVER. Only one called me on that Saturday morning after a few hours when I was looking. Nobody else ever called me, there was a couple that called a few days later and what an appalling experience if we, you know just because you may have been using Dave at your local estate agent for the last twenty years, or because you’re using an agent in your locality, I think there can be other considerations about are they open twenty four seven because that’s when tenants are looking for their next rental. And how quickly do they reply back to enquiries? Because, if you don’t reply speedily, then they’re going to go and organise viewings at another property or just three or four in their diary. It’s unlikely that they need to put anymore in. And we need to understand the dynamics of the space and how it’s changed to what it was for us. I think the change of speed of responses is another area where landlords need to up their game in the speediness to tenants as they enquire.
Richard: Yeah, I totally agree. The use of technology and the users of technology expect that instant gratification. You know, a like on a Facebook post is the same as an enquiry for a room rental or something. I’m wondering if it was perhaps because if they knew who you were James, they might have replied to you. I’m sure they didn’t or you didn’t wear a disguise when you contacted them but that’s probably a fitting point to draw a line. Is there anything else you wanted to say perhaps before we part? Is there any way people can get hold of you or is there any glaring omission that you think ‘Richard can’t leave without saying this?’
James: Yeah, literally on the site I didn’t use my email address or anything like that, I’m generally just shocked that I didn’t get a response from traditional agents. I think the world is dynamic in different areas and because of that, we do quite a lot of webinars and stuff. If you go to our homepage which is www.UPAD.co.uk just go across the bottom and there’s a variety of webinars coming up and if it’s on at a time you can’t make then still register because you’ll be sent a recording of it afterwards to watch on catch up as it were after the event and I think listening to Podcasts like this, not just my own but all the others you’ve been doing over the recent months which I appreciate, I’ll have a listen to myself over the weekend. It’s really important to educate yourselves and what’s happening in the space. We need to reflect on what does this mean for our own portfolio and adapt accordingly and not be passive. We have to react to what’s going on as well and I think it’s an important aspect of this whole bit. And those calculators and resources I’ll share with you in a bit so that everyone listening can make use of them.
Richard: Perfect, and I’ll make sure those links go in the show notes when they come across to me. I appreciate you listening by the way! I think I could talk to you for hours, we don’t have that luxury and I think the whole education and learning piece is a whole new topic I think. I might do a special episode on that alone because I think raising awareness and being up to date is such a vital point. We don’t want to be a dinosaur dying out. So, here’s one for you. I know I might be in the twenty percent, not eighty percent but I am really looking for a solid solution where I can self-manage even remotely so I’m still in search of that. I’m kind of pleased to see some of the technological breakthroughs and services that are available to help me do that. Not quite there yet, but, I’m a bit like you in that I want to have this - I went to see this tenant directly the other day, I had the ability to do it and it was such a great experience and we both benefited a lot from it. So, if I could do that more but use technology to my advantage that would be great so maybe that’s something for your development team. A bit more on the twenty percent rather than the eighty percent that you were maybe targeting. I just want to say thanks again, everything will be in the show notes. It’s a pleasure talking to you, I wish we had more time, thanks James, I really appreciate talking to you today!
James: Likewise, and I hope everyone’s enjoyed listening to this podcast and many thanks for your time. Thanks Richard for inviting me on, it’s much appreciated.
Wrap Up
I don’t know about you, but I always find it fascinating when people can support their opinion with facts and data and James was a real goldmine of stats throughout our conversation.
Of course, James represents a business that operates in the PropTech space, so it was natural that we discussed some of Upad’s approach to the market, and the benefits it or others like them have to offer. However, we also picked up some really useful insights more generally, and perhaps even subtly at times.
Here are some of the points that I noted down after our conversation in summary:
- The world is dynamic, and we need to adapt to change – this point came through loud and clear as we chatted. For example, James operated bank-financed BTLs even before the BTL mortgage, mentioned Loot as one of the previous sources of tenant inquiries and flagged some changing social-political patterns among other examples. We need to be adaptable.
- Incorporation or rent increases may not be the answer to our problems – Section 24 should be well understood by this audience by now, however, the most spoken about solutions just might not work for us. I wrote about the ‘it depends’ alternatives for YPN magazine in the past (just email me if you want a copy of that article by the way). Incorporation won’t suit everyone and simply trying putting up the rent might not be possible either, as James outlined, with over 50% of our competition NOT being affected by S24 at all and 30% of landlords being affected by rent arrears suggesting clear affordability issues too.
- Use technology as a research too – I like the way James explained how he signs up for rental alerts in the areas where he has properties as an aid to knowing what is happening with his competition. Equally, technology, including this podcast and James’s own webinars and articles, help us to stay abreast, or even ahead of many of the dinosaur landlords out there.
- Mobile, responsive and reachable is what is required now –92% of tenants look for properties online, with 56% on mobile, with 41% of inquiries being placed at evenings and weekends too! We need to be reachable and responsive to survive in this technological age.
- We have some of what we need, but not yet all! – New apps are available to help us, but many of these are simply communication tools in disguise. What would REALLY help us is a larger degree of process automation for some of the work created by the increased communication flow. Hold that thought though, as I MIGHT just have some news on that in the very near future. Technology is emerging and developing, and whilst it is not necessarily 100% yet, there are some solutions with us today, such as with Upad, or hopefully coming soon, such as with automated payment histories with the credit reference agencies.
- Create ‘standout’ with our listings – good tenants ALWAYS have a choice! Our job is to catch their attention, showcase our properties (and perhaps also ourselves) and then respond in ways and at times that suit our customer more than us. Out of hours and rapid response is the new normal!
In addition to these key points there were plenty of others shared throughout our discussion. Equally, James kindly offered to share a range of resources, including an 11-page document in how to standout from the competition with your rental listings. Just drop me an email and we will share these for you.
Equally, If you would like to know more about Upad and their cost-saving online lettings service, go to their website, which is www.Upad.co.uk or call them on 0330 021 8110. James could pick up the phone himself if you call him on a Saturday, you never know given his love for immediate response!
I have another very interesting discussion to share with you next week in this space, as I have a chat with one of the products of the Pi Labs PropTech stable, but more on that later.
For now, I will close by reminding you that the show notes can be found over at www.thepropertyvoice.net or if you want to talk about anything from today’s show, receive an intro into one of my guests or just talk property investing, email me at podcast@thepropertyvoice.net, I would be happy to hear from you!
Once again, all I want to say is thank you very much for listening once again this week and until next time on The Property Voice Podcast…it’s ciao-ciao.