By Phil Preston
Real estate agents in the Macarthur region of Sydney, Australia, are helping to prevent tenants in crisis from becoming homeless, and in two years they have saved 57 tenancies. It has become an operating practice because the social outcome is aligned with commercial returns.
How it started
The Macarthur Real Estate Engagement Project (MREEP
) is the name of the collaboration between real estate agents, homelessness service providers and various government agencies, including housing, community services and unemployment support in Western Sydney. Formation of the project was led by the nonprofit entity, Western Sydney Community Forum (WSCF
), whose mission is to strengthen the capacity of the social sector. It has a membership of more than 200 social-sector organizations, and it helped bring the players together with the ultimate aim of reducing homelessness.
The project has staged objectives: firstly, to ensure tenants at risk of eviction are introduced to available support services to reduce new cases of homelessness; and secondly, as trust builds between real estate agents and the social sector, provide people in temporary or refuge housing situations access to rental opportunities.
The project strategy is built on understanding the needs and self-interest of both community services providers and the real estate industry, which includes:
- Supporting tenants at risk of eviction benefits community services providers and the government by preventing people unnecessarily entering the homelessness service system.
- Averting tenant evictions benefits real estate agents by saving stress, time and money, as well as saving rental loss and remediation costs for their clients, the property owners.
A single point of contact for real estate agents helped create a referral channel to community services providers who could assist tenants. A new pathway into the social service system has been opened up at an early intervention point, rather than at crisis point.
In the first two years of operation (2012 – 2014), there were 102 referrals to social support providers from five real estate agents. This has now grown to nine private real estate agents in Macarthur who regularly refer tenants showing signs of rental crisis.
- 57 tenancies have been saved
- For tenants who can be contacted, there is a 77 percent tenancy saving success rate
- About half of tenants referred through the MREEP process had never previously been in contact with the social service system and would potentially have been evicted.
- Real estate agents are beginning to trust community service providers and are contacting them with notifications of vacant properties.
For the five original participating real estate agents, business outcomes include:
- An estimated $56,000 in hard costs saved from preventing the 57 evictions
- Real estate agents have a higher prospect of keeping property owners as clients and gaining future sale commissions (valued at an average of $9,000 per tenancy)
- A saving of approximately $6,370 in rental income per tenancy for property owners, or $363,090 in total
- Capital/remediation costs of approximately $4,000 saved per tenancy for property owners, or $228,000 in total
The project was initially established through a state government grant, with WSCF providing the facilitation role. This has now been integrated into the business-as-usual roles of two non-government agencies, highlighting the enabling role that the social sector can play in shared value creation
Partner diversity has been a strength of the project, and balancing competing needs has been challenging at times. A project member with real estate experience has been critical in acting as an “industry translator," assisting and guiding the working party to better target messaging, including a cost-benefit analysis for real estate agents.
The language used by the project changed over time. In 2012, the messaging was in the form:
“Develop mutually beneficial relationships between Real Estate agents and services that work with the homeless and disadvantaged”
By 2014, it had become:
“We work with local real estate agents to reduce rent loss, introduce and sustain tenancies.”
MREEP is a great example of the shared value principle
, where commercial return acts as an incentive for business to address social issues. It also means that the benefit is likely to be sustained because it is creating financial value for the businesses in question.
About this case study: Eva Gerencer (WSCF) and I recently submitted this case study to the Shared Value Initiative and you can download the full (4-page) version from their website.
Image credit: DollarPhotoClub
Phil Preston helps employees, managers and leaders create strategies that link social purpose to personal and business performance. He is CEO, Performing with Purpose Network, and can be contacted on email@example.com