Real Estate Property Management Software Market SWOT Analysis by Key Players: TenantCloud, SHIFT Next Level Innovations, GENKAN.

How can a property management company make more money?

A recent study made by CMA (Competition & Markets Authority) – “Residential Property Management Services, a Market Study” (December 2014), stated the common problems and findings for the industry.

According to the report, the UK property management industry is generally unsatisfactory for Landlords and Leaseholders. The study shows that 4 in 10 (42%) respondent were not happy with their current property manager either as a result of poor service, or value for money. 28% of respondents agreed that property management charges where also excessive and unnecessary.

Overall, the common theme with property management in the UK falls into two brackets.

  1. Quality of Service Provided
  2. Value for Money on the Services Received

The quality of the service provided for landlords in the UK is currently agreed to be poor and in need of improvement. Mix the issue with the general over-priced services through inadequate transparency of expenses means that the PM market in the UK is in need of reform.

As at 2015, the market for property management is estimated at 1.3 million  leasehold homes in the UK. The estimated average spend on property management per property is £1,100. This equates to a £1.4 to £2 billion industry.

The problem is, many landlords are hesitant to use a property manager to manage properties and that is because of the two problems stated above. The market for property management is very price sensitive. The sensitivity in price, means that the current average 10–15% rental fee is too high for many to consider PM services.

Therefore my first advice is to lower the property management fees. This will in turn increase the number of service provided to landlords across the UK.

Now, the issue which arises now is how property management companies are going to adequately profit from the lower service charges.

Consider the work of a property manager for a moment. Contracts, Payments, Bills, Notices, Health and Safety, Inspections, and generally being the first point of contact for a tenant when a problem arises.

Now consider how much of this work can be automated by a software. Specially, a software working on a mass scale across homes in the UK (and perhaps abroad). There are websites that already do this. However the majority of these software’s are either for personal business use, or marketed for businesses in general.

Why not, consider a business that uses a property management software to manage residential homes directly for the landlord? This would cut down the labour costs related to a physical manager doing the work. This would increase the scale of homes that can be managed with more ease.

Through using this strategy, the software would in-turn become the property manager, and a software is a good investment to make due to the low maintenance expenses. With the introduction of this software, there is minimal requirement for overall staffing apart from periodical inspections.

Overall, the general property management industry is at a very lucrative state. Partially because of increasing house prices despite the Brexit effect, meaning more and more houses being rented. This industry however is in need of a big reform in structure; both quality of service and value for money.

A business that can improve on both areas, will succeed in the industry and have access to a £2 billion a year market.

However, having tried and failed to find some real evidence on the elasticity of demand in this industry, my conclusion is just a perspective opinion and real facts could differ.

A basic SWOT analysis of the market:

  • Strength: High demand for quality property management.
  • Weakness: High charges deters much of the market to use the service.
  • Opportunity: Increasing demand for property management as housing prices increase dramatically in the UK.
  • Threats: Real-estate agencies getting there first and monopolizing the market.

(Estimated housing prices in the UK between 2015 to 2020, as a percentage of the house prices today). Source: Crossrail 1: how to get rich quick as house prices speed up.

If you liked this answer, then make sure you check out my profile for more business related answers: Mo Amini