When I was thinking about what to cover in a piece on compliance, it struck me that compliance may well mean different things to different people.  To the finance and housing departments, compliance may be about HCA governance and IDAs while those involved in Asset Management would have a different definition.

Well, as you’d expect, I come at this from an Asset Management viewpoint and, from that perspective, most people would agree that there are five main areas:

1. Gas Safety
2. Electrical Safety
3. Legionella
4. Fire Risk
5. Asbestos

Sometimes, lifts are added to this list, but these are in people’s minds because either they affect many properties, or the effect of an incident is significant.  They are the ones which have statutory regulation in place, on which you will be audited and where sanctions include jail for non-compliance.

Having said this, however, there are many other areas of compliance which should not be overlooked.  In theory, anything for which you have a service or inspection contract/regime in place falls into this category.  If there was no risk, even if only of inconvenience, to customers, visitors or staff, there would be no need for the servicing or inspections.  These may include:

• Lifts
• Door entry systems
• Automatic door/barrier Systems
• Play areas
• Grounds maintenance
• Trees
• Fire alarms
• Fire fighting systems
• CO/smoke/heat detection
• Bath hoists
• Communal generators
• Emergency lighting
• Communal air handling plant
• Lightning conductors
• Commercial kitchen appliances
• Commercial laundry equipment
• Building energy management
• Domestic white goods
• Dry risers
• Smoke vent and louvre systems
• Solar panels
• PV panels
• CCTV
• Air conditioning
• Intruder alarms

And more….

What about other standards against which you are measured, such as Decent Homes/SHQS/WHQS and HHSRS? Do these come under the “Compliance” banner?  They may well do, so you may have to broaden your thinking to consider all such areas and to ask whether you have regimes in place and, if you do, are they being effectively monitored and managed.

Historically spreadsheets have been king and, even now when there are effective systems in place in an organisation, it is not unusual to find that someone has developed a spreadsheet or even procured a separate piece of specialist software, to monitor an individual compliance area.  This is usually because firstly, people still work in silos and don’t know or care that there are systems in place and, secondly, because there is no overall strategy in place or being effected to pull these threads together.

Compliance has to be regarded as a top-down issue.  A Strategic Compliance Framework needs to be in place to guide the board and managers.  It is not good enough to just appoint a compliance manager or, worse still, rely on individual managers for different compliance areas.  An organisation needs to be able to rely on there being a single version of the truth derived from a single validated property list and a consistent approach to managing the processes involved.

Such a compliance framework ensures that policies and systems are kept abreast of the latest legislative changes (for example, when the HSE brought in MOT style servicing for gas appliances or, more recently, the measures in the building and fire safety acts)

A framework will also assign responsibility.  In this context, I mean that areas of compliance should have nominated owners within the organisation.  This is not the same as the “Responsible Person” in the regulations which, in most cases, means the RSL.  This allows for Building Safety Managers, Asbestos Duty Holders as well as individual compliance area specialists.

A framework may also put in place a system of independent quality audits of field work.  If you don’t audit your contractor’s work, are you certain of the quality of their servicing and inspections?

With such a framework, a board will be able to be assured that an organisation is compliant by asking:

• Do we know what the key regulation, legislation, and codes of practice are and how to respond/adhere to them?
• Do we know who owns each area of compliance both strategically and operationally?
• Do we have clarity on how we manage risk by having a signed policy and associated procedures in each compliance area?
• Do we have clarity on control, control owners and control evaluation?

When they also ask, “How can we be assured that we are fully compliant?” then the answer has to be that there is a proper management system in place with reliable reporting on data that is being properly and consistently maintained.

So, what functionality should a software solution for compliance management offer?  In my view, the following is a reasonable list:

• Individual items requiring servicing or inspection should allow multiple cycles to be in operation, allowing for separate actions for each cycle (for example, a lift may have annual, quarterly and monthly actions). They should also, where relevant, be assigned to service contracts/contractors.
• All service and repair visits should be recorded, whether or not the service was completed.
• Certificates, photographs and any relevant documentation should be recorded and viewable for each visit.
• Escalation processes for failed access should be built in and should include the generation and recording of letters and any other communications sent to residents and responsible staff members.
• Where an inspection requires follow up action, that the action is prompted, recorded and there is a full audit trail through to resolution.
• Wherever possible, servicing and inspections managed by the compliance solution should have automatic two-way integration with the Housing/Repairs system, sending jobs out and receiving back appointments, job events such as failed access, completions, certificates, etc.
• Where integration with the Housing/Repairs system is not in place or required, an easily managed set of interfaces for automated bulk loading of data from servicing and inspection contractors and consultants.
• Information on the status of compliance under various headings should be visible to those who need it, both within the compliance system and through integration with other systems.
• Targets and key performance indicators should be established so that dashboards will give an instant picture of compliance performance.
• The facility to maintain data for, and report on, independent quality audits of field work.
• Reporting capability is key as there is a need to measure and demonstrate compliance in all areas.

Of course, if your asset management system can deliver all of this and integrate it with all its other functionality and with your housing and mobile working systems, then you’re onto a winner.

For further information on running Fixed Assets processes through MRI Asset Management visit our website:
https://www.mrisoftware.com/uk/products/housing-asset-management/

Achieving strong tenant retention rates is a goal on every property manager’s list.

Sadly there is no golden answer on how to convince your tenants to stay with you – but there are proven strategies that you can start to implement.

Why is tenant retention important?

Any business development site will tell you that it’s five times cheaper to keep clients than it is to generate new ones, and this same concept applies to residential property owners/managers and their tenants.

By building a tenant retention plan, you can decrease your cost per acquisition, build a consistent income, and continue to scale your revenue, risk-free.

Calculating your tenant retention rate

Tenant retention rates are calculated much the same way as any user rate.

1. First, total how many tenants you have at the start of a period.
2. Second, total how many tenants you have at the end of a period.
3. Divide the second number by the first.
4. Multiply this by 100 to get your % tenant retention rate.

For example, if you had 120 tenants at the start of June, and 110 tenants at the end of June, you’d do (110/120) = 0.92.

Then, when you multiply this by 100, you’d discover you have a 92% tenant retention rate for that month, which you can compare with the year previous.

Additionally, to gain extra insight into which properties are a good investment, you can calculate average tenant retention for each individual apartment block, retail site, or office building you manage over a period of time that makes sense to you.

What is a good tenant retention rate?

For residential properties, you should aim to retain 60% of your tenants (slightly above the national average of 48%).

This means, out of the 120 tenants you had in June last year, you’d still have 72 of the same individuals renting the same property.

For retail/commercial properties, you want to aim a little higher. A retail tenant retention rate should be around 70%, as businesses tend to stay in one place for significantly longer than residents. However, if they are growing successfully, they’ll eventually save a deposit for their own space and move on.

How to retain your tenants: 8 proven strategies

It’s idealistic to assume that all your tenants will stay with you. In general, residential clients leave because they:

• want a better or bigger home
• are relocating for a job
• found a cheaper price elsewhere.
• moved to be with family
• have saved enough to purchase a property.

This sometimes means that retaining tenants is completely out of your control. You need to focus on what you can influence, rather than what you can’t.

1. Incentivize lease renewals

When you are rapidly approaching a lease renewal period, you need to consider how you can convince your tenants to stay with you. This may include offering rental discounts upon a successful renewal or even agreeing to previous requests they have made (such as permission to have a pet).
No matter what, provide them with a reason to stay, and you’ll be positioning yourself for a lower tenant turnover.

2. Be responsive and maintain good communication

In today’s digital world, we can assume that tenants are best friends with technology. This means they’ll be expecting almost-instant communication and will want to be able to reach you either by phone, email, your website, and social media.

3. Keep rental rates fair and consistent

It can be tempting to increase and decrease prices according to the market.

However, you can improve your tenant retention rates by charging a consistent price. This way, clients can budget accurately and will be more willing to stay at your property.

4. Prioritize maintenance

It’s impossible for a tenant to feel safe and secure when the building they are renting is falling apart around them. Standard maintenance should always be a priority on your to-do list, and not an afterthought.

5. Be flexible with good tenants

Tenants who have proven themselves as reliable individuals should be granted a little bit of leeway every now and then.

For example, you could:

1. Allow them to paint the walls (as long as they repaint when they leave).
2. Make exceptions for late fees caused by ill health or personal circumstances.

By being an understanding property manager, you are more likely to retain tenants.

6. Take tenant feedback seriously

Admit it. As humans, we’re bound to make mistakes.

When your tenants are complaining, or, at the very least, providing feedback, be sure to listen, take their advice to heart, and try to do better.

They might be upset that you accidentally booked a fire alarm drill for seven am on a Sunday morning, for example, rather than the usual Monday. When this happens, be proactive with taking responsibility for what has happened and apologize.

7. Pre-screen all tenants

Tenant retention isn’t simply about being the best property manager you can be. It’s also about choosing the right tenants and making sure they have decent intentions.

Look at their credit score and address history, and ask them how long they want to rent your property. If you keep onboarding tenants who only want to stay for six months, this is one quarter of the national average, significantly impacting your tenant retention rate.

8. Facilitate community building

The Wall Street Journal interviewed successful apartment owners on social media; these owners believe that tenants who make friends are more likely to stick around for another lease term or two. This idea of friend and community building is a key aspect for property owners and managers to retain tenants.

How to retain tenants

Retaining tenants ultimately comes down to their experiences and how you treat them.

Whether you run commercial or residential properties, it’s likely each person spends significant portions of their day in the unit they rent. When they don’t feel supported when things go wrong, or they don’t believe you have their best interests at heart, they aren’t going to renew their lease.

Tenant retention rate – FAQs

Tenant retention isn’t an easy concept to wrap your head around. Here are some FAQs to help you understand.

What is the average retention rate for a tenant?

The average tenant will stay in a property for around 25 months (or, just over two years). This brings the average tenant retention rate to around 50%.

What is a tenant retention rate?

Tenant retention refers to the sum of how many tenants stay with you over a period of time, for example, June 2021 to June 2022.

How do I get rid of a bad tenant?

Evicting tenants is never an easy process. You can consider raising the rent so they’ll leave naturally, pressing charges for damages, or simply asking them to leave. Typically, if they reach the end of their lease, you can then start an eviction through the courts.

How do I increase my commercial tenant retention rate?

Commercial tenant retention is a little tricky. The main cause of them moving to a new property is because they need a bigger unit or have gone out of business. Listen to their concerns, and consider offering cheaper alternatives if needed. For other ideas, read our blog on commercial tenant retention.

How can I communicate with residential tenants?

It’s important to put a system in place for property managers and tenants to efficiently communicate with each other, otherwise information can get lost and requests go unfulfilled. Residential properties that use tenant communication software can easily manage all interactions with new leads and residents through different contact methods – phone, email, text, web chat, and more.

How can I automate the lease renewal process?

Offering a quick and easy way for residential tenants to renew their lease can increase tenant satisfaction, improve retention rates, and streamline the property management lease renewal process. Electronic signature and storage tools that keep all your lease documents organized and secure can simplify the renewal process for residents and property managers.

Retain tenants with MRI’s property management software

Looking for ways to boost your tenant retention rates?

Our property management software has an intuitive Tenant Connect client dashboard that allows tenants to easily file maintenance requests and renew their lease when the time comes.

It’s an easy-to-use platform designed to foster strong relationships between yourself and your clients.
Trial our services today.

Purchasing investment properties can be a risky venture when you don’t have all the information to hand. Details can be missed, and you could end up buying a building that’s more trouble than it’s worth – with high delays in rent payments and the frequent, costly maintenance required to avoid tenants suing for safety issues.

A property’s rent roll is meant to counteract blind decision making when you are looking for profitable investments and has been used in real estate for years.

What Is a Rent Roll?

A rent roll by definition is a management tool that details properties, displaying legally required lease information and helping landlords track start and end dates of contracts, rental income by property, and even annual increases. A property’s rent roll can also help building owners/overseers process and track recurring issues.

What Is the Purpose of a Rent Roll?

Rental properties are increasing four times faster than incomes. With so many real estate companies handling multiple buildings, they needed a quick and easy way to review data.

When rent rolls were first developed, the system was a revolutionary concept that reduced the element of risk in purchasing properties.

A rent roll keeps vital property information in one place, aiding future sales to interested real estate buyers.

How to Predict Rent Roll Commercial Real Estate

Rent rolls aren’t just incredibly useful for property managers, they are also important in real estate. If you’re wondering how, then know this: it helps you calculate good and bad investments.

Say, for example, you wanted to buy a building that consisted of multiple commercial offices for hire. A rent roll report would allow you to delve into the information available to you – such as when each office has been rented, how long for, and any current occupiers who are leasing space in the property that would likely continue renting from you.

How Does a Rent Roll Work?

Still wondering what a rent roll is and how they work? Rent rolls can be produced in a variety of software applications, including manually inputting data into Excel, or utilizing software that does part of the work for you. This collaboration of data allows for easy perusal and informed judgements.

Who Uses Rent Rolls?

Rent rolls are mostly used by property managers, landlords, and real estate investment companies.

They can be bought and sold on the private market to give insight into rental incomes in the area and help buyers judge the quality of a building. Well-maintained older buildings with clear service history listed in rent rolls may still be worth purchasing due to the aesthetic priorities of
today’s renters.

How is a Rent Roll Useful to a Property Manager?

Rent rolls compile the information required to efficiently maintain and look after multiple properties so that important details don’t get missed. Rent rolls were designed with a specific purpose in mind: enhancing the quality of services for tenants and landlords directly affected by the manager’s actions.

How to Create a Rent Roll

Now you understand the definition of a rent roll, it’s time to learn how to make one. A detailed rent roll report would include:

1. Identifiers: Rent rolls should detail address and contact information first and foremost, as “identifiers” for each property. They could then list details about the area, including average incomes and average property prices.
2. Unit Information: If the rent rolls are covering a unit, then it’s only useful to a property manager on a regular basis if it details important information about how many flats or offices there are and how much work there is to be done.
3. Individual Properties: Each individual division should have its own subcategory that lists the number of doors and windows, square footage, bedrooms, bathrooms and other facilities.
4. Tenant Details: Contractual lease agreements should be tracked at all times, and are an important part of an overall rent roll definition. Any agreements made (such as the rent due date and security deposit information) should be added here, including annual increases according to the rent value of your property.
5. Rental Income: An annual total rental income will be displayed at the end of a property’s rent roll report.

Altogether, therefore, a rent roll gives a great overview of costs and income – much like any balance sheet – with just a few more details.

It helps property managers stay on top of their workload and calculate the disposable income they have to spend. Rent rolls can work in tandem with a property management software to manage complex priorities and make data-backed decisions.

Rent Roll Checklist for Property Managers

A major cause of burnout among property managers is the bad business that gets carelessly brought into the rent roll for the sake of growth. A big list where nobody pays their debts isn’t worth compromising a smaller but consistent income that allows you to budget accordingly.
When determining how a rent roll is useful to a property manager, we need to take a look at the management properties which are actually worth adding to your overall portfolio. Often, it’s what you say “no” to that will allow your rent roll to succeed.

We interviewed Darren Hunter from Inspired Growth Training, who shared some tips to help you avoid making wrongful decisions and instead grow a profitable property’s rent roll.

1. Annual Contract Value

As a fee maximizer, Darren believes in taking to account your expertise and proven track record when determining your fees and remaining firm in negotiations. If you must give discounts, set an acceptable range that isn’t compromising your needs. “You can’t just be breaking even,” says Darren. How an owner negotiates fees with you is often a tell-tale sign of the quality of the management and the likely future of a property’s rent roll. Difficult owners in most cases are often difficult due to money, according to Darren, whilst owners who share the same values as you (i.e. the type of owners you want) will be more reasonable and will appreciate the true value of managing quality properties.

2. Rent

A rent roll report should list the potential income someone could gain from a property.

“Be wary of low rent properties,” says Darren. According to him, low rent usually means lower property management fees and attracts low-end tenants – both of which you do not want if you are aiming for a profitable earning portfolio. Determine an acceptable price range for rent and avoid going below this benchmark.

3. Location and Distance

As they say in real estate: location, location, location!

Ideally, you would want to avoid suburbs and streets that have notoriously high crime rates. It also depends on the distance they cover and the detail you go into. Longer distances mean higher costs due to the time and expenses required to travel and service the properties. Always keep in mind that a substantial percentage of your rent roll should be located near you.

4. Extreme Landlords

A professional and amicable customer relationship is one of the pillars of a high-quality rent roll.
A property management software can help you achieve this, but equally important is assessing the character of a landlord before bringing them into your business. Be aware of any extreme behavior of owners in relation to financial and emotional motives. These may include:

1. Unreasonable expectations regarding tenancy laws, repairs, wear/tear, etc.
2. Not wanting to spend money on repairs.
3. Requiring cheap fees.
4. Poor quality property.
5. Requires rent levels that are unrealistic.
6. Unreasonable tenant expectations and criteria.

5. Quality of Property

Be wary of buildings in less than reasonable cleanliness, quality and maintenance condition. This will all be clear in a property’s rent roll report. Newer homes don’t usually translate to lower maintenance costs and older structures don’t necessarily mean poor quality. It’s important to always be objective when checking out a property and not be fooled by that fresh coat of paint.

6. Property Structure

To build a high-quality rent roll, you also have to be discriminating in the style and structure of the property to be managed. This usually ties in with the low rent criterion discussed earlier. From Darren’s experience, a profitable rent roll usually doesn’t include older flats and units unless they are in good shape and exceed your desired rent level. In such cases, Darren suggests increasing your property management fees to maximize your income from low-cost housing.

Don’t forget to track and cross-check every detail in a property’s rent roll.

7. Furniture

Furnished properties often require management consent due to complications associated, like wear and tear issues. Ideally, you would not want to manage partly or fully furnished long term rental properties, unless it caters to high-ended executive types.

A useful rent roll starts with keeping a critical eye on the new management you bring into the business.

By setting benchmarks, you can determine the right owners, properties, or tenants that will help you grow an ideal rent roll in real estate – one that everyone can be proud of working in.

Applications to Help Property Management

One document alone isn’t enough to aid property managers and investors decide how to predict changes to rent roll commercial real estate and calculate when action is needed.

MRI offers a range of real estate software to transform the way communities live, work and play. You can manage rental properties, finance, assets, and more.

Reach out if you have more questions like “What is a rent roll?”, or better yet, take a look at what we can do with our no-obligation, free demonstration. Contact us today.

Our recent online roundtable event, “the next property disruptor: unlocking the opportunity in Single Family Rental through technology” brought together visionaries from organisations serving the Single Family Rental market to share their knowledge around how to invest in the UK SFR market, as well as delving deeper into the operational management of SFR portfolios.

In a lively discussion, our panellists explored the current state and future of the SFR market, as well as the challenges facing this exciting new asset class as it grows.

We’ve summarised the key discussion points in this post. You can watch the full roundtable discussion here.

Investor and tenant priorities are converging around ESG

A key trend identified by our panellists was the increasing importance of ESG driven by the government’s Minimum Energy Efficiency Standards requirements. With a target for all domestic rental properties to achieve a minimum EPC rating of C by 2025, it’s no surprise that potential SFR investors see ESG as a key factor in their decision making and scoring metrics for potential new investments.

Our panellists stressed that this was set to accelerate even further, however, driven by the convergence in both tenant and investor priorities. With net zero developments being filled very quickly and a high level of tenant demand for energy-efficiency features in properties, there’s an alignment between resident and investor interests which is likely to fuel significant further development of energy-efficient properties.

With such a clear direction of travel, our panellists were excited about the role of SFR in driving innovation and setting an example for what’s possible, creating standards for performance and influencing the types of technologies that will be retrofitted to the rest of the UK’s housing stock.

Supply will be a challenge – will tech allow investors to explore second hand stock?

The availability of housing stock for SFR was identified as a key limiting factor for its growth. With supply for new build housing outstripped by demand, it’s likely that SFR investors will struggle to acquire enough developments to meet demand.

While the incoming MEES requirements are likely to drive even more private landlords out of the sector, second-hand housing stock has been floated as a potential solution, but our panellists were sceptical – a disparate portfolio of different grades and types of properties is more difficult to manage, and removes many of the efficiencies around asset management and operational performance which make the sector so attractive to investors in the first place.

With a high number of new entrants to the market looking to deploy funds quickly, it’s likely that some SFR investors will begin to look to second hand stock, and there are a couple of start-ups aiming to use AI and machine learning technology to identify suitable properties. However, our panellists stressed that this was unlikely to make up for the economies of scale – and the opportunities for community building – that a single centralised development could offer.

Data is in its infancy, but will be critical to the sector’s growth

On the topic of data, our panellists explained that with SFR such a new asset class, the level and consistency of reporting data was very low, particularly when compared to more established sectors such as commercial property. However, the demand from investors for data insights is high, and as SFR matures we can expect to see a move from relative data scarcity to a position of abundance.

Industry benchmarking was flagged as a current area of development – the UKAA is currently working on a benchmarking project to begin to capture this information. There’s also a huge level of demand for data on resident demographics and profiling to better understand tenant motivations and requirements, and referencing agencies and tenant portals are being investigated as potential sources for this information.

One area requiring further development is the collection of ESG information. The nature of SFR makes this challenging to collect, as individual tenants are responsible for the management of their own properties, and their behaviour has a huge impact on performance, leaving SFR developers with less control over outcomes than in the commercial or BTR spaces. While Internet of Things technology has the ability to collect this information, GDPR is an issue, posing challenges in data collection and storage to fully understand how SFR residents are performing against benchmarks or even each other in relation to energy usage.

PropTech is essential to reducing gross to net leakage

With efficiency a key priority, our panellists were optimistic about PropTech’s potential to help maximise yield on SFR developments.

Access control and keyless entry was seen as a high-potential, if expensive, area – removing the need to manage and distribute keys for viewings, maintenance and void management could significantly streamline operations and reduce costs. Security was also considered important, particularly given the nature of SFR developments compared to BTR, where properties were separate and potentially more vulnerable.

Asset management was also seen as being a fertile ground for innovation, with technologies like FixFlo praised for their ability to streamline maintenance processes. In the back-office, automating procedures like rental renewals was also seen as a potential time-saver, driving reductions in OPEX.

Tenant experience is a crucial differentiator

Our panellists all agreed that a core element of SFR’s future growth and success was tenant happiness. Happier tenants stay longer and contribute more to the development of strong communities, driving economic and social benefits for investors and residents alike. With the current private rental sector struggling with a poor reputation and generally inconsistent level of service, there’s a clear opportunity for SFR to differentiate itself in the market by delivering an exceptional tenant experience.

Data was understandably seen as a crucial prerequisite for developing tenant experience, and panellists were already focussing on demographic and tenant profiling research as well as resident surveys to get to grips with tenant needs and opinions.

Our panellists also stressed the importance of the “social” aspect of ESG, leveraging the unique ability of SFR to create ready-made communities. Tenant portal technologies were seen as an important method of fostering and moderating community growth, seeding interaction between residents and helping to smooth out misunderstanding or disagreements.

Building for the future of SFR

Our round table discussion emphasised the bright future of SFR, and its potential to drive economic, environmental and social benefits not only within communities but on a wider national scale.

Our panellists are all highly ambitious for the future of SFR as an asset class, and committed to investing in the data and technology required to ensure its success. Many saw current efforts as a down-payment into the long-term brand reputation of SFR, with the goal of building brands that tenants could eventually stay and grow with for life. With brand experience seen as such a key differentiator, Customer Lifetime Value is likely to be an important performance indicator in the longer term.

At MRI, we’re passionate about helping you leverage technology to drive greater operational efficiency and better brand experience. To find out more about how our solutions could help you improve the performance of your SFR developments, get in touch today.