Paul Mahoney: Hi, I’m Paul Mahoney. This is Proper Wealth. The show we discuss, All things’ wealth creation, with a focus on property. Today we’re discussing innovation in property management and joining me is Jess Ford from Herddle. Hi Jess?
Jess Ford: Hi Paul.
Paul Mahoney: Thank you for joining me. So we’re talking about innovation in property management. I think probably the best place to start is first off, what is property management and what’s the solutions that are being provided in that market. My take I suppose is that that market is pretty stagnant. The current solution is pretty similar to the solution a decade ago and probably a long time before that as well. And there’s probably a lot of innovation that can take place in that space. Is that fair to say?
Jess Ford: Yeah, absolutely. I’d say the thing that struck me about what was going on in the sector is the focus was on development. We’ve seen a huge increase in institutional investment in the rental sector over the last five, 10 years. And there’s been some phenomenal developments that have come up. But my concern is, I looked at what was out there and what happens when a development is ready and it’s got all fantastic facilities, it looks brilliant on day one, how do you sustain that so that on five years down the line it’s still as good a level of building as it was on day one.
And really it looked like there was no focus on the management to do that and to sustain that. If you looked at what was out there, as you say, it was all exactly as it has been for the last five, 10, 20, 30, 40 years stuck in the dark ages.
Paul Mahoney: Okay. All right. So fairly archaic sort of system with regards to how those properties are being managed. Okay, and what signing to come about so far as that innovation? What is the innovation that’s taking place in that space to solve that problem?
Jess Ford: There’s been… If you look at the whole process flow from when you have a rental, so from the point of a property being bought by an investor to when it’s eventually sold and all of the rentals, and the renewals and the processes that go on in between that, on the transactional side of things, that’s largely been looked at. You’ve got Rightmove, you’ve got Zootplayer, you’ve got Purplebricks, plenty of companies that have come along and done great things there. But then if you look at the whole service side, it’s stuck in the dark ages, maintenance. I’m a tenant, I call up to report a problem. My agent picks up the phone, I’ll call the contractor. Contractor, I can do five o’clock on a Friday. Tenant, I can only do Monday at 7:00 PM.
And then before you know it, it’s kind of three months down the track and the issue is still not sorted. Is that really how we live today and everything else? And you look at the tenancy process. There’s really five key things that change on a tenancy agreement. That’s rent, security deposit, term and minimums stay. And really do you need to charge 100s of pounds for that? It doesn’t happen anywhere else and more to the point, you could just send out those… Fill in those five key details, send it digitally out to the landlords, digitally out to the tenant, they both sign, done move on.
The payments process. Even my bank account, I take it for granted that I see banks, some of the most outdated institutions, I can still see my bank account in real time. Why do I have to wait for a statement at the end of every month that just shows me a snapshot. It doesn’t really show me what’s happened in terms of transactions, but shows me a snapshot at the beginning and the end of each month. It’s madness, right?
Paul Mahoney: Yeah, okay. So it’s about solving that problem. So far as you say, the archaic way of getting on the phone and trying to organize someone to come in and fix your toilet, for example, when it could all just be done from the palm of your hand.
Jess Ford: Well exactly. And when we looked at the innovation that was going on that service side of things, predominantly, it’s either been pieces of software that plug in to various parts of that process. So software that makes the inventory process more efficient or makes the viewings more efficient for Asians. But ultimately they’re either doing parts of the process and/or they’re selling to existing agents. And ultimately, unless you do that whole process and you focus on the underlying customer, the landlord, and ultimately the tenant, then you’re really not going to disrupt the whole thing-
Paul Mahoney: And it’s the time to get that done there.
Jess Ford: … Change things for the better, exactly.
Paul Mahoney: Okay, great. And I think some of what you’re saying there becomes even more relevant given some of the recent legislative changes around renting fees. Something that which I think is a good change in the… Rather than charging your tenants that generally can’t afford to pay £5, £6, £700 entry fees to their property, that’s not able to happen anymore. There’s been lots of speculation around that being passed on to landlords, because I know for a fact that a lot of agents, not just London but UK round agents, their whole business model is based on those fees that they were charging tenants. And I suppose what you’re saying is there’s not really any need for those fees there, especially when all the and things are just pretty much templates and can be automated.
Jess Ford: Exactly, if you look at what agents, the kind of average fee for full management of a property, it’s anything up to high teams, even 20% once you add on all the hidden costs involved. So that isn’t just the kind of the added extras, but it’s also if you look in the small print, you’ll find often that it’s referral fees back to contractors or its arrangement fees. It goes back to what I was saying before, which is why do we need to charge them? Really, why should we charge it? And what I feel strongly and what our business feels strongly about is opening up transparency in the sector.
There’s a chronic lack of trust. And to go back to my thoughts on why we need to address the whole process, we really need to start from scratch and provide a full alternative to what’s out there to really change things. So a company or an offering that doesn’t charge extras, that’s modern, transparent and that is focused on the underlying customer, landlord and ultimately tenant. I always say, if I’m a landlord, I’ve probably got assets elsewhere. If I’ve got a share portfolio, I can usually log in and see in real time exactly what the current status of my share portfolio is doing. Why don’t I get that with my property portfolio? It’s common sense.
Paul Mahoney: It is common sense, I think it’s something that probably a lot of people haven’t thought of, but once they are presented with that solution, then it becomes common sense and it became something that is valuable.
Jess Ford: It’s what they say, real innovation is something that you don’t know that you needed until you see it.
Paul Mahoney: Yeah, absolutely.
Jess Ford: And that’s what we feel strongly about. And that’s what we see with the solutions that we believe should happen for all involved in the process. It’s about integrating everyone in the process as well. You need to provide a solution that serves owners and as I said, allows owners to see their real estate portfolio just like they would any other asset class, to have complete oversight over the maintenance, to see in real time the financials, to track performance, to have a complete oversight of any tendencies or renewals that are going through but not have to do it themselves. And then for residents it’s about feeling that they’re well-supported, that they’re looked after that they’re not just someone that’s occupying a property.
For contractors, it’s about making sure that they can do their job more efficiently. Bid for jobs, quote for jobs and get things done more quickly. And ultimately it’s for staff too because we’ve got to invest more in the staff that work in property management. And it’s another thing I feel that’s lacking. The negotiator side has typically been the darling of the property world. People tend to think, oh well, property management is about fixing people’s problems. It’s not, it’s a vital job. If I’m a portfolio manager in the city of London, I’m proud of my job and people respect it. Why isn’t it the same level of respect for property managers? It’s just as important role.
Paul Mahoney: Yeah, I think that’s very true. And yeah, I think you’re right. And the focus there, I suppose, part of the reason it’s probably gone that way is there’s probably been for the agents more money in the negotiated side of things. Would you say that’s probably therefore why that’s poping more so the darling of the industry-
Jess Ford: Absolutely.
Paul Mahoney: … And the lending side has probably being neglected and hence that’s why it has that sort of stigma attached to it.
Jess Ford: Well, in my experience, most people go into to property, into agency to be a negotiator because of the commission. It’s a lucrative job and you get your company car and you get all the perks with it. So why wouldn’t you? And there are fewer people who fall into or choose to go into property management rather than fall into it. And actually as a result, they haven’t got the training, they’re not paid properly. They don’t have the systems that support them. It’s no wonder that there’s such a high turnover of staff in property management. And actually it’s one of the main concerns of landlords that we hear. They say, I’m constantly speaking to a different person every week and that’s because good property managers are struggling and why shouldn’t we invest in them?
Paul Mahoney: Yeah. So essentially, and that just trickles down, doesn’t it? The whole system is kind of broken away because you’ve got a high turnover staff, under-trained staff and underpaid staff and that results in a lackluster service to the landlords. The landlords are upset with the agents, and also the tenants become upset with both the landlord and the agents, which affects the reputation of the whole industry as a whole, I suppose, in a way.
Jess Ford: Yeah, to go back to the topic of what this discussion is about, innovation and property management, we see that there’s two things. There’s two sides to it, there’s technology, but there’s also people. For us, the technology should enable the service. It shouldn’t just define it. I think I mentioned earlier on about the computer not being able to fix a broken toilet.
So property management until that point, and if we reach that point is always going to be about people. So for us, technology needs to enable our staff as well as our clients to have a better experience. So if you look at the number of manual processes involved in a typical property manager’s day or agent’s day, there’s multiple repetitive tasks. On the agent side, as an example, an agent could go out and have five viewings during an afternoon. And by the time they finished all of their viewings, it’s only when they get back to the office at the moment that they then have the time to do the paperwork.
But if you use technology and you have a technology that allows them than they’re sitting in their car between viewings and a prospective tenant comes and says, “I want to make an offer, call the landlord, are you happy with this offer?” “Yes.” And then immediately on their phone they’re able to add the tenant details, add the terms, confirm them, send for the holding deposit. And by the time they’ve got back to the office they’ve got five tenancies going through. Isn’t that more efficient?
Paul Mahoney: Okay, great. That’s all we’ve got time for now. We need to go to a break and we’ll come back to this discussion. Please don’t go away. We’ll be back right after this break.
Speaker 3: Property is a great investment option, but it’s one of the largest purchases that you’ll ever make. As individuals we’re all limited by our resources and regardless of our experience, knowledge or time, we can achieve much more with the help of a qualified team, an extra resources being available. Nova financial specialize in assisting clients to achieve financial freedom through property investment. With over 100 years of experience we shape your family’s future. To invest in property with absolute confidence call us on 0-2038000600 or visit nova.financial.
Speaker 4: I’m going to ask, have you ever lost money in Spain buying property of plan? If you have, well, we may be have the solution today. With me is Michael Coyne of Reclaim in Spain. Welcome to you and Martine De La Herran, lawyer from [inaudible 00:14:06] County. Welcome to you too. Now, something changed in the mid 2000s here that made claims possible to get this money back.
Martin De La H.: Yes. The Spanish Supreme court, basically issued a judgment interpreting a law from 1968 confirming that the banks have received the deposits for clients that bought properties in Spain that were never built, were responsible for not ensuring that those monies were properly bank guaranteed.
Speaker 4: Okay, so the responsibility for looking after that deposit falls clearly with the banks now rather than any different developer.
Martin De La H.: Yes. As long as the property wasn’t built.
Speaker 4: Michael, talk us through the process. Somebody recognizes their situation what should they do? Call you and tell their story?
Michael Coyne: Call us first of all and we’ll take them through exactly the process. We’ll put people at ease to let them know that it’s actually a very simple process. It’s not a big heavy litigation on their behalf that we do all the work, and we’ll audit every case that comes in. The vast majority of people that [inaudible 00:15:11] have got cases because it’s a very simple structure. If they’ve put money down on a deposit that went to a developer in Spain and that property wasn’t built, as Martin said, it’s protected by law.
Speaker 4: Here’s a crunch question for you. What’s it going to cost?
Michael Coyne: In most cases, nothing. Because we claim for the amount that is put down, capital plus interest on that capital, which often goes back 10, 12, 14 years. The fees we charge are taken up by that capital. So in most instances people will get back at least or more than they put down as their original deposit.
Speaker 4: Okay. And if you don’t win?
Michael Coyne: We don’t charge a penny.
Speaker 4: That’s amazing. That’s really good news. Now look, are there any time constraints here?
Martin De La H.: Yes, there are time constraints. There is a time limitation of 15 years since the house should have been a handed over. And since 2015 there is another time limitation, five years maximum. So generally speaking, most of these cases it will have a time limit in September, 2020.
Speaker 4: I think what we need to really know, what’s your success rate?
Martin De La H.: Well, nearly 100% because all [Fairman 00:16:22] final cases have been won so far. So we are really nearly there.
Speaker 4: Okay, so very clear what you must do. Call Reclaims in Spain. Make your claim. Tell your story, and let’s hope you’re successful.
Speaker 3: Meet The Authors is a brand new mini series involving leading experts in the property industry, including mentors, developers, property lawyers and other industry experts who share insightful stories about their journey and their books. Each book is compiled by authors with years of valuable experience, tips and observations providing you with new knowledge about the property industry. To find out more, visit the website, property-tv.co.uk/liblary.
Stephen Galton: Hello and welcome to property TV. I’m Stephen Galton, host of Property Question time. We’ve completed the filming of series one, over 260 successful episodes. We’re now about to film series two. The difference, well, we’re going to be filming in our new studio adjacent to the Canary Wharf development. Keep those questions coming into us. Keep our panelists, our experts busy and we hope you enjoyed the new series as much as you did the last one.
Paul Mahoney: Welcome back to Proper Wealth. Today we’re talking about innovation in property management and with me is Jess Ford from Hurdle. Thanks for joining me again Jess. Right, so before the break we were talking about, well in general innovation in property management but some of the limitations in the current solution and also the fact that current technology isn’t really being very well utilized in the property industry. And you mentioned the example of the property manager having to go back to the office and do all the paperwork, the kind of old fashioned way, which made me think of something that I thought just earlier this week.
I was buying a property in Manchester and I had a stack of contracts this high and the solicitors insisted that I go through that stack of contracts and sign them with ink and initial every page. And I’m sitting there thinking this is ridiculous in this day and age, why am I doing this? When a digital signature is legally binding and it’s just so much easier and then you have to stick it in the post and hope the role model doesn’t lose it. It just seems silly, doesn’t it? When you say it out loud in this day and age. So I think in general technology could be so much better utilized in property, not just property management but right throughout the whole process.
Jess Ford: Yeah, absolutely. I completely agree. I think one of the things that’s happened in property, it goes back to what I was saying earlier about the innovation that’s been out there and has been there. It’s primarily been kind of small bits plugging into various parts of the process and then ultimately that selling focused on agents. So actually then when it comes to the underlying landlord, it’s sort of all new. Whether and there’s sort of bits of this and bits of that. And actually there’s nothing that does the whole process and makes it sort of clear and undaunting to landlords.
That’s what we believe strongly and one of the things we’ve been developing it’s taken us two years to develop a platform that takes a really complex process, but it’s not rocket science.
[inaudible 00:20:26] Property management is not rocket science. I think there’s been this kind of black box attitude to it that it’s really complicated and it’s really difficult. Property management is about communication, transparency and customer service. And actually what… If you just peel back the complexities that it’s normal. Humans always make things over complicated. What we’ve been doing is taking that process and thinking, right, how do we go back to intuitively the process that would follow. So for example, your example of the digital signing, it doesn’t have to be scary. It’s what we take for granted in signing many other contracts. It’s just making sure that from a landlord’s point of view, they understand, that it’s secure, that it’s all part of the process flow. And actually that takes time as well. And it takes explanation and I think that that’s…
Paul Mahoney: And I suppose in a way, in utilizing that technology, it also sort of releases the landlord and in a way the tenant, from relying too much on the agent. So you mentioned that making agents’ lives easier and that’s good and improving the whole staffing side of things. But I think it was something that I’ve definitely experienced. A lot of landlords get quite frustrated with their agent and a lot of tenants get quite frustrated with their landlords. Or one of those sort of combinations. Whereas I suppose having this technology in place that sort of automates and makes it all easier, will just make all three of those people’s lives easier, won’t it?
Jess Ford: Yeah, absolutely. What we firmly believe and what we’ve done is to integrate platform for all stakeholders. So that’s owners and investors, it’s residents, tenants, it’s agents and staff and it’s contractors too. Because they are always forgotten. But ultimately the crux of property management, a lot of it is about good quality contractors and good work. So, and second to that you talk about no one trusts anyone. And I think that’s because of this lack of transparency. So it’s what we’ve done is to clear away how completely complex and kind of difficult it is and just make it completely clear guided processes. And one of the things you touched on, which I think is quite good is about we need to really focus on the tenant as well and the tenant experience. If you look at what motivates landlords and what landlords are concerned about, well there’s two key parts to it.
Number one, it’s asset value, so protection and enhancement of asset value. And number two, it’s income stream. And both of those things fall back on really good property management. Really good property management is fundamental to that. Because it’s… The asset value enhancement and protection is about really good and works and being able to identify problems before they become issues. And the income stream is about reducing voids and making sure you have long term tenancies. How do you do that? You do that by making sure that your tenants are happy. So one of the things we think, and why the tenant interface is so important on our platform is so that they feel supported, they feel that they’re well looked after, that any issues that are raised are sorted out and ultimately they feel that it’s a home rather than just being, as I said earlier, an occupant in a property for us [crosstalk 00:24:03].
Paul Mahoney: I get that. I suppose in simple terms that a happy tenant is going to be a tenant that pays the rent on time and looks after the place. And actually from a maintenance effective there’s probably going to be far less maintenance if the tenant does feel as though it is their home and they’re being looked after.
Jess Ford: Yeah, absolutely. And you can then look into tenants wanting to make small improvements to their home if necessary or they’re more likely as you say, to propose or raise real justified problems rather than wasting time. So it benefits everyone.
Paul Mahoney: That makes a lot of sense. And I think another point that is quite relevant is a shift that’s taking place in the UK. Well not just the UK, but pretty well all property markets at the moment toward inner city living by young professionals, the younger generations. Something I often talk about is that shift away from the dream being the quarter acre block with the garden and the picket fence out in the suburbs, more so toward having bars, restaurants, cafes, jobs on your doorstep. And that’s resulting in the re population of city centers in pretty well all the major cities, UK one. The people that are populating those properties are young professionals who are tech savvy and would much appreciate these solutions probably more so than the older generations. Would you say that’s fair?
Jess Ford: Yeah, it’s probably natural isn’t it? The younger generations will appreciate the technology. But I think in response to your point about the people moving towards city living, it’s more looking at what the development that’s coming as a result of that is. And it’s more and more the development of properties that require management. So leasehold management. So evermore we’re seeing cities expand and therefore it’s living in flats, apartment blocks, and they all require management of the communal parts as well as if it’s build to rent the properties themselves within that block. So it’s just going back to the fact that lettings and property management and block management done properly is so important.
And again, in terms of your point about happy tenants and how people are living more in terms of rentals, it now takes the average first time buyer something like 20 years to save for a deposit. So whether we like it or not, as a society, we’re looking at longterm rental, so it needs to be done better.
Paul Mahoney: Yeah, absolutely. And I liked the point that you made there about the human aspect to it. Technology is great. It makes our lives easier. And we spoke about the three main people that they see this sort of technologies. Lives made easier from it. But obviously there is a human aspect to it as well. And that’s probably just as important.
Jess Ford: Yeah, I completely agree. I said earlier and it’s what we believe, which is technology should enable service, particularly in property management. It shouldn’t just define it. Because again, and Tele computer [inaudible 00:27:20] break record, a broken toilet, then it’s going to be about people.
Paul Mahoney: It’s about making lives easier as opposed to replacing people that I suppose.
Jess Ford: Exactly. And I think the buzzwords at the moment can be [AI 00:27:34] this and these sort of words that are used. And going back to your earlier point about, it’s slow, people are slow to adopt. It’s because there’s a lack of understanding about it and it’s a fear factor. And actually technology doesn’t need to be scary or daunting and actually we should learn to walk before we can run. So we need good technology that enables a good service now you know, to then build on in the future.
Thanks for joining us for this discussion on innovation on property management. Thank you, Jess, for joining us as well. I think it was a very informative discussion. Join us next time for more on property investment with a focus on wealth creation.
Speaker 3: Property is a great investment option, but it’s one of the largest purchases that you’ll ever make. As individuals, we’re all limited by our resources and regardless of our experience, knowledge or time, we can achieve much more with the help of a qualified team, and extra resources being available. Nova financial specialize in assisting clients to achieve financial freedom through property investment. With over 100 years of experience, we shape your family’s future. To invest in property with absolute confidence call us 0-20380006000 or visit nova.financial.
John Howard: My name is John Howard, and I’ve been investing in developing properties for over 40 years. In that time I’ve been very successful, but of course I always made the odd mistake as well. In my book, I explain how to be successful and what to do should something go wrong. I’ve survived three property recessions. I can help you do the same. My book is available online. Please go to johnhowardpropertyexpert.co.uk.