The rate of housing rent growth is finally beginning to slow, which will come as a relief to many. But now is not the time to grow complacent about the state of the UK’s rental market. It faces a range of structural issues and operational inefficiencies. These inefficiencies are raising costs, cutting revenues, and, most importantly, causing fewer renters to secure the homes they need.
Property Technology, or ‘PropTech’, can do much to solve these inefficiencies. Innovative PropTech companies are making a number of ancillary improvements to the rental market. However, there is now a definite need for PropTechs that address more fundamental issues, such as communications between tenants and letting agents. Platforms such as krispyhouse.com are doing just this, bringing rental communications into the age of WhatsApp, LinkedIn, and Deliveroo. These tools can help improve and speed up the process of the UK’s faltering rental market.
A market under pressure
The recent report from Hamptons shows that the average growth in rents has nearly halved since last summer. But as the report also noted, rents are still 31% above their pre-pandemic average. Also, according to recent research from the Resolution Foundation, rent increases in the capital are still set to eat up any medium-term increase in real wages.
Competition for rental accommodation is often fierce. There are now a record of 25 viewing requests for every listed property. Furthermore, the Renters (Reform) Bill, currently going through its Second Reading in Parliament, is, even in its amended form, likely to further constrict supply as landlords leave the market.
What’s less often discussed is how these constraints on supply affect the agency aspect of the market – namely, the letting agencies that handle transactions. These businesses are often very small. In the UK, the vast majority have fewer than five employees.
And so, the growing number of viewing requests is putting a large and growing operational burden on these letting agencies – one which many are finding very difficult to manage.
This has serious consequences for the sector. It represents a significant market inefficiency; raising costs and congesting the pipeline of transactions.
The UK rental sector should use the breathing space provided by the recent slowdown in rent growth to make some structural improvements. It should aim to increase its efficiency in order to manage this spike in demand and the impact of new regulations.
PropTech is currently focusing on secondary issues in the rental market
PropTech has, so far, made various efficiencies and operational improvements to the rentals sector. Digital viewing platforms are reducing the number of in-person visits to rental properties. These ease the burden on agencies even as the number of inquiries rise precipitously. New AI-powered tools are allowing for more granular searches for rental accommodation, improving market discovery.
PropTech is also reducing the costs of doing business in various ways. Digital inventory management tools increase accountability for tenants, landlords, and letting agencies, reducing charges and the exposure to liability. Other tools let estate agencies and landlords cut down on energy costs by making use of internal sensors; or gives tenants automated advice on how to fix everyday maintenance issues themselves, lessening the need for outsourced services.
Fundamental problem of rental communications
Each of these innovations are useful. But few PropTechs are addressing the most fundamental issue facing letting and estate agents. More than anything else, the job of an agent is communication. An agency is a liaison between various parties to a transaction, and they are charged with facilitating this transaction. That means handling a large volume of correspondence, documents, payments, and requests. They have to juggle different moving parts as negotiations move between the various parties.
Communication is only set to become a bigger and more complex task as – again – the number of enquiries skyrockets. Established PropTech tools are not helping agencies manage this task.
The main rental platforms, such as Zoopla and Rightmove, do not have any kind of in-app communications function. Instead, prospective tenants and agents have to communicate across a tangle of different channels – such as texts, phone calls and emails. This adds needless difficulty to the work of letting agents. Documents and correspondence get lost; important details are not recorded properly; conversations flounder. These antiquated methods of communication are raising costs, cutting revenues, and holding back transactions.
Nor are such methods favoured by renters. Normally, the only two ways of connecting with an agent would be by phone or by email. However, research has revealed that 72% of consumers prefer texting over calls. This is especially true of younger consumers, who are the core of the rental market. This generation relies heavily on platforms such as LinkedIn, Deliveroo, and – somewhat analogously – Tinder and Bumble which are all based around instantaneous in-app communication.
These outmoded methods are damaging the rental market. If letting and estate agencies are to cope with the rising number of enquiries, then this issue needs to be addressed.
How PropTech can fix rental communications
Using digital technology to rationalise communications between letting agents and tenants would cut down on administrative burdens, speed up the flow of transactions, and reduce costs.
As someone who spent many years as an estate agent, I’m passionate about finding technological solutions to the structural problems in the sector that I saw first-hand. I believe that cost-effective PropTechs can make a real difference to the market and help – ultimately – to get British renters into the homes they want.
The first order of business is surely to put rental communications on a sounder footing. New digital platforms, such as krispyhouse.com, are offering a dating-style service in their ease of use – but tailored for the rental market. Rather than having communications diffused across multiple channels, krispyhouse.com’s new website and app offer direct messaging and calls within the platform. In addition, it notifies prospective tenants of newly available properties that match their requirements – driving transactions by connecting buyers with sellers.
How these new Proptech platforms work
Following the initial enquiry, tenants, agents, and landlords can instantly connect. Tenants can – if they wish – talk anonymously with private landlords, as the platform does not require the use of personal mobile numbers. The platform also gives letting agents access to an integrated CRM system and unlimited advertising. These can help to open the market up to smaller agencies.
The platform can be easily adopted by agencies great and small. Zoopla and Rightmove charge a monthly fee of £700 to £900. A fixed cost which can be prohibitive for small agencies. krispyhouse.com offers a free service at present and a planned monthly fee starting at £100 per month. Given the small size of many letting agencies, I believe that cost-effective PropTech solutions are the best way to drive needed efficiencies in the market.
In addition, such solutions will help estate and letting agents better manage their new responsibilities under the Rental (Reform) Bill. The new legislation will require, among other things, much quicker response times to tenants’ maintenance requests.
The rental market is a complex one. It is only getting more so as demand rises and new regulations are rolled out. Cost-effective PropTechs that can help agents navigate these challenges and tenants to more easily secure the properties they want will be an important part of putting the sector on a surer foundation for the future.
krispyhouse.com is an innovative team of urban professionals with a mission to revolutionise the UK’s rental property market. Recognising that the current property market is marked by poor communication between tenants, agents and landlords, the team at krispyhouse.com has created an innovative platform to facilitate greater sector communication. krispyhouse.com provides a fast, cheap, efficient, and secure way to move through the rental process, connecting them with intermediaries instantly. krispyhouse.com is committed to empowering tenants, agents, and landlords with the knowledge they will need to thrive in an ever-evolving property market.
