Renting in London can be a challenging experience. According to recent research from the Resolution Foundation, rent increases in the Capital are set to eat up any medium-term increase in real wages.[1] And that’s if one can secure a rental property in the first place: there are now a record of twenty-five viewing requests for every listed property.[2] Also, the prospect of Renters (Reform) Bill, even with the recent proposed amendments coming into force, in its current form will likely only make the situation worse by prompting more landlords to exit the market, which will push rents even higher.
Londoners know this all too well. What is less often discussed is how soaring demand affects the supply side of this sector – namely, the letting and estate agencies that handle these transactions. These businesses are often very small. The vast majority in the UK have fewer than five employees.[3] And so, the growing number of viewing requests is putting a large administrative burden on letting agents – one which many are finding very difficult to manage.
This has consequences. It represents a significant market inefficiency; raising costs and congesting the pipeline of transactions. This means, ultimately, that fewer Londoners are getting the rental accommodation they need.
Property Technology, or ‘PropTech’, can make an appreciable difference here. Innovative PropTech companies are already making a number of improvements in the rental market, but there is an urgent need for more PropTech solutions that improve communications between tenants and letting agents – a critical aspect in the rentals’ business.
Using digital technology to overhaul and speed up communications between letting agents and tenants would cut down administrative burdens, speed up the flow of transactions, and reduce costs. Platforms such as krispyhouse.com are doing just this, updating the means of communication for the ‘WhatsApp Generation’ – the core of London’s rental market.
Disjointed communications holding back deals
Currently PropTech tools are not helping agencies in their day-to-day liaison with tenants – or indeed with landlords. Rental platforms such as Zoopla and Rightmove do not have a dedicated in-app communications function. Typically, prospective tenants and agents communicate across a whole series of channels – such as texts, phone calls, or even letters.
This makes the day-to-day job of agents much harder. Correspondence and vital documents get lost; important details are forgotten; conversations vanish into the ether; which does not help to smooth the process of completing deals.
Nor are such methods good for renters. Traditionally, the only two ways of connecting with an agent would be by phone or by email. However, polling has revealed that 72% of consumers prefer texting over calls. This is especially true of younger consumers aged 20 to 40, who are the backbone of the Capital’s rental market.[4] In both their professional and social lives, this generation relies on platforms such as LinkedIn, Deliveroo, and Bumble, all of which revolve around seamless and instantaneous in-app communication.
These outdated methods are affecting letting agencies’ margins, and, in turn, their ability to put Londoners in the homes they want. If the Capital’s estate agents cannot communicate effectively with tenants, landlords and other parties, then this depresses transaction volumes and leads to higher costs.
Tech-driven innovation can provide the answer
Current PropTech innovations are mostly confined to secondary matters such as digital viewings and digital inventory management. These are all useful in their own way, but they do little to make liaising between agents and tenants any easier.
A digital platform, such as krispyhouse.com, offers a dating-style service – akin to Tinder or Hinge – but tailored for rental housing. Rather than making parties juggle various channels separately, krispyhouse.com’s new website and app offer direct messaging and calls on the platform itself. It also notifies prospective tenants of newly available properties that match their requirements – spurring the market on by connecting buyers with sellers.
Following the initial enquiry, tenants, agents, and landlords can be connected quickly and anonymously, as the platform does not require the use of personal mobile numbers. It also offers letting agents access to a fully-integrated CRM system, and unlimited advertising – driving transactions and opening the sector to smaller agencies.
Cost is also a concern. Zoopla and Rightmove charge a monthly fee of £700 to £900; a fixed cost which can be prohibitive for smaller agencies, while krispyhouse.com aims to increase accessibility, offering a free download and a planned monthly fee starting at £100 per month.
In addition, new PropTech solutions that promote seamless communication will help estate and letting agents better manage the new responsibilities they will have to undertake on behalf of landlords with the Rental (Reform) Bill, which mandates, among other things, much quicker response times to tenants’ maintenance requests. Although the Bill has been pared down, it is still likely to prompt more landlords to leave the market, restricting supply even further so PropTech that drives efficiency is more important than ever.
In the long run, there is no substitute to increasing housing stock in the London market. New technology cannot, on its own, address this shortage. But what it can do is help to make the rental market as efficient as possible, maximising rental supply while new legislation to increase construction is rolled out.
[1] Rental crisis to get worse as earnings ‘won’t keep up’ with London flats – CityAM
[2] https://www.theguardian.com/money/2023/oct/05/supply-shortages-and-mortgage-rate-rises-push-uk-rents-to-highest-point-ever
[3] https://www.statista.com/statistics/678429/united-kingdom-uk-real-estate-number-of-businesses-by-number-of-employees/
[4] https://yougov.co.uk/technology/articles/31699-most-britons-would-prefer-receive-text-over-phone-#:~:text=Age%20is%20a%20key%20factor,of%2049%25%20to%2035%25
Feature Photo by Ivan Samkov: https://www.pexels.com/photo/red-and-white-signage-outside-the-house-8962254/
