Why Service Accommodation Should Be Regulated - with Paul Smith

Today we're going to be talking about serviced accommodation. We are now in season six, episode 11 and today I am joined by Paul Smith of Touchstone Educate. So, without further ado, Paul, welcome. If you could just take a couple of minutes, just explain a little bit more about yourself, your background and how you got into property.

If you could please. Hello, Mark. Thank you for having me on. Real pleasure. So I got into property, you're not going to believe this at the age of about 4, because both my granddad were into property different ways. So I could see my Irish granddad doing commercial stuff, could see my English granddad building houses and selling off fields to the council. And then what my dad did, very bright guy, Ed Marston. He made more money from property than he made from teaching. So at the age of four or five, there was me under the floorboards and I used to. Because he couldn't get down there and I used to get my money. So you. I don't know, you're from this neck of the woods. So the first house I can actually remember is in a place called Wombwell, which is like Barnsley, more or less. And we bought this big old Victorian monster thing, like three stories high. And what we then did over the next few years, I say we, me and my dad, we kind of modernized it. So when I started, I was four or five, by the time I finished, I was like 15. We'd done three or four houses. So we were putting in central heating, we were putting in double glazing, we were putting in, like all the mod cons for us at that time, because any house that we bought, it wouldn't have an indoor bathroom. It'd have, you know, tin bath in front of the fire and the toilets at the bottom of the garden. So I got into property almost before I can remember. And it was always very good to me because he would chuck me under the floorboards and I would rip out all the lead wiring and, and the plumbing and he didn't give me pocket money, but we would take all the metal down scrapyard and that was my money.

So why is it that you've sort of come full circle? Why did you come back into this and why are you now sat in Doncaster in your offices now, sort of teaching people what was the sort of progression from where you were.

Sorry.

To where you are now?

Like, what do I want to do the rest of my life? And we made a fairly fundamental decision. We don't want to work for anybody else ever. So we then got into property and it was probably Six, seven years after that that I first got into service accommodation and I was actually property networking event. I sat next to a guy called Justin and we were talking about Formula One because I'm a mechanical engineer, he's an electrical engineer and he was William's chief telemetry engineer, which was really fascinating for me. I spoke to him for hours about that and towards the end of it I sort of said to him, what do you do then? And he said, service conversation. I said, what? And he said, you know, Airbnb and all that. Oh, yeah, yeah, yeah, yeah. I said, what are you doing that for? Then he said, well, it's good money in it, really. And I said, well, where are you doing it? And he said, middlesbrough. And I was like, I laughed out loud. I said, what? And he and I. And no harm to anyone from Middlesbrough. And this wasn't me being nasty, this was just like an instant reaction. I said, who the hell wants to go to Middlesbrough? And he said, come up next week and I'll show you. So I did. And what he's got there is fabulous. He's got like a church with, you know, all like the vicarage and everything and a big car park and he's converted it to, I can't remember exactly, it's like 16 or 18 apartment. And he's making all kinds of money. And I was, wow. Wow. By that time I already had, oh, I don't know, 15, 16, buy to let flats and houses and stuff. So all I did literally is I converted one. One flat, one bedroom flat, place called Dumbarton. And anytime I tell anybody that story, they say the same to me that I said to Justin, why would anyone want to come to Dumbarton? And so it really doesn't matter where you are. I think with the right service accommodation offering, if you provide the right service, the money will come.

The next question is, you're now obviously teaching people service accommodation. Touchstone is teaching people service accommodation. We've had Gaudy, we've got Abby coming up on the podcast from Touchdown. What is the one big mistake that you see when you send your delegates out into the wide world? What is the one big mistake that you see that most commonly making when they're getting into service accommodation and all.

Of this jazz, the single thing that holds them back the most is they try and do everything themselves. And what I'll always tell people is, look, I'm trying to help you to set up a business here. So a big part of what I try and get across to people is it needs to be done. That doesn't mean you need to do it. And so many people are very, very resistive to employing VAs, you know, virtual assistants. And in my head, anytime you're doing anything that could be done by a virtual assistant, you're working for £1.50 an hour. Now, I don't know about you, but I didn't get into service accommodation to work for £1.50 an hour. Now, that's not to denigrate to people in the Philippines or wherever else that do work, because, you know, over there, that's really good money. So I feel like we're doing, we're doing good in the world by allowing people that wouldn't normally get access to that kind of money to earn, by their standards, pretty good money. But then from our end of the telescope, all the bits and pieces that need to be done get done and they get done well, but you don't need to do it.

Just to go over from what you said there, episode three of this series was talking about outsource and about working with virtual assistants and how it is so effective. I think the main takeaway that I'm getting from doing this season is there are so many things that people in the service accommodation world can learn from people who run the guest houses, people who have the rental accommodation from the hospitality world. But on the flip side, there's so many things that I believe that people from my world right now, from the hospitality community group, from the Boostly group, could learn from sa and I truly believe that outsourcing, working with virtual assistants is one of the key ones. How do you envision it changing in the future? Do you think this will become regulated to fall in line with a lot of B&Bs and guest houses have to do to get open? Or do you think that it is just going to keep as is? I'd love to get your opinion on this because this is like a pretty big topic at the present moment in time.

Any industry where there are super profits, those profits normalize over time. And one of the ways they normalize is by regulation. So it's inconceivable to me that there won't be more regulation within the next 20 years. Will there be significant regulation in the next two or three? I don't think so because it's not where the government's attention is. They're trying to deal with Brexit, they're trying to deal with immigration, they're trying to deal with massive issues. But they will get round to it. Because housing and the housing crisis is a big part of the discussion in society at the moment. Now, I'm not saying for one minute that service accommodation is responsible for the housing crisis, but I think it's indisputable that there is a housing crisis and therefore housing as a sector will get looked at. But just to go back to what you said to begin with, Mark, I would teach people that it is actually a legal requirement. I do teach people there's a legal requirement to register for various things and to do various things. So you're right, I hear all the time, why would you bother getting trained? You can just take your house and stick it on Airbnb. We can. You physically can. But you're breaking all sorts of laws if you do. So, you know, for example, from my perspective, I would teach people that you shouldn't be operating a business without professional indemnity and public liability insurance. Let me talk to you about July 2016, Brighton. You know about this Airbnb incident? No.

Enlighten me.

All right, so four people. So two couples having their 50th birthday party went out and hired this, like, two bed flat in Brighton just to chill, very relaxed and whatever. One evening they went out just to watch the sun go down. You know, very civilized. Gin and tonic, little olive or something. So they stood on the balcony watching the sun go down. Balcony collapsed. Three of them fell two stories into the basement. One of them fell one story to street level and was impaled on the railings. Whose fault is that?