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7.2.4 Threats to the Apartment management budget

The Tenant Fees Bill, due to become law in 2018 makes ‘up front lettings fees’ illegal but does not
ban tenant(s) paying for Check Out Inventories, and, is unclear on whether guarantors can be
charged referencing fees and whether where a tenant fails referencing this can be charged.

7.2.5 Voids: The longer each tenancy the less the voids risk. To minimise voids our Planet Rent app
provides for Operator exclusivity on re-lettings but reserves the ability for Clients to:
 decide the exclusivity period (say 10 days),
nd
 pre-nominate a 2 Agent or multi-agents, for all units or just hard to let units e.g.,
penthouses,
 can automatically post properties to your Client website based on availability dates, and
 can automatically post properties to the Planet Rent portal as well as Right Move, Zoopla
etc….
So no matter how many Agents are working on larger buildings you as Client retain total control of
the process through one portal.

7.2.6 Rent discounts: can be offered to tenants introducing friends, and/or, in return for taking longer
tenancies. Encouraging longer tenancies reduces voids and must be promoted, research suggests
that over time this will become the norm. The American model suggests 3 years is the average
tenancy length which arguably ties in with the median job tenure for workers age 25 to 34 being 3.2
years, worryingly ‘Generation Y’ believe they will have as many as 20 jobs in a lifetime,

Contracts should emphasise that the brand proposition is ‘you’ll want to stay’: so 2 contract types
should be available:

Premier short stay - 12 month tenancy, optional 6 month break for a small rent premium,
Premier flexible - 3 year tenancy with annual break-clause.

Clever tenant marketing could position the longer term tenancy as a clear front runner by referencing
long term rental growth against the retail price index (RPI) growth. This could tie tenants into the
‘premier flexible’ by hedging or being tied to inflation (pre-agreed upward only RPI or consumer price
index (CPI) rent increases), and, say 1 week rent free for a 2 year tenancy, and 2 weeks rent free for a
3 year tenancy. Or annual tenancies could be offered and Section 21 Notices served to call for
tenancy renewal at a re-negotiated market rent.
* note RPI favours landlords as it generally outperforms CPI

Against this could be a fair early leave policy which means paying back the rent free and paying
administration costs for surrendering the tenancy. This way ‘long stay’ can be promoted and will
reduce (a) void costs (b) inter-tenancy redecoration costs thereby increasing the Freehold investment
value.

7.2.7 Planning for voids
Ringley’s reporting tools include:
 Lease expiry and start graphs – with and without break clauses being exercised

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