Houzen is a three-way residential marketplace – connecting landlords, agents and tenants. Thanks to our technology and data, landlords instantly engage with the three best-suited letting agents that are dynamically matched to their specific property. Higher quality tenants are attracted in days, not weeks, with an all-inclusive suite of management and lifestyle services that enhance their living experience, and the property can be remotely managed at the click of a button.
Houzen’s proprietary technology links directly to agency prospect data, utilizing Machine Learning to proactively suggest relevant properties to achieve faster lets. Our tools bring contracts, payments, enhanced referencing and simplified property management to everyone. Quantitative and qualitative vetting allows our hand-picked tribe of agency partners to deliver best-in-market quality and speed while our landlords benefit from pre-negotiated rates that are exclusive to Houzen!
From our experience, the entire lettings process today is extremely inefficient. At the same time it is a huge market, an asset that will forever be in demand, and there is no stopping the trend towards increased renting in major cities across the world.
All landlords want to let their property as quickly as possible, at the best rental value, and keep good tenants in the property for as long as possible. Yet even as the real estate market continues to deploy new tools, we believe that none of these effectively target the landlord, leading to the all too familiar grief felt from landlords down to tenants. As the property is the generation point for all associated participants, we realised unlocking its potential is the key to significant gains, both financially and in terms of efficiency. By moving treatment of property away from being viewed as a traditional asset to more of an experience, and putting Houzen at the center of it, we are able to drive and unlock value across landlords, letting agents and tenants.
Substantial accomplishments to date
Since our official launch we have worked with large portfolios competing with corporate agencies such as Hamptons, Knight Frank, and Foxtons.
Our success with Greystar exemplifies our progress. Last year we worked on their student stock. This year we have received their existing portfolio of open market stock. We also work with other major landlords and investors such as Kennedy Wilson, McLaren and The Collective.
Since May, the Houzen platform has facilitated a cumulative rent roll of nearly 700k GBP.
We boast a strong group of angel investors, including Robert Evans, former Global Fl head at Wellington; Niki Dembitz, Principal at Green Oak Real Estate; David White, Partner at Tyndaris Real Estate; Tobias Huzarski ex KKR Real Estate, and Director of Real Estate at Man Group; Telmo Valido, director at Lonestar; and Stefan Krause, our Special Advisor, former global CFO of Deutsche Bank AG and Rocket Internet board member.
As part of our tenant offers, we have struck deals with leading brands, as well as a partnership with Uber.
We were commissioned by the RICS to author a proptech Insights paper, due for publication on Nov 15th. We have been invited to speak at high profile property events such as the RESI conference and OxRes.
We have been nominated for awards: PropTech Company of the Year, Young Personality of the Year and Disruptor of the Year.
We make money when our landlords make money – we take 20% of all agency fees charged through the Houzen platform. This translates into an estimated net revenue per transaction of 100 to 500 GBP depending on the property value and contract length. The value on sales transactions (as opposed to lettings) is conservatively estimated to be 1500 GBP per close when we activate that channel. There is also an enormous opportunity to monetise product placement and partner products as we align ourselves closely with the lifetime value of the property, though we won’t be looking to activate these options for the next 12 months at least.
Use of proceeds
We are currently raising 1.5 million in Seed Capital to fuel the next phase of growth, and Seedrs will help us reach that next stage, together with the additional funding that we are raising privately. We currently expect the capital allocation to be as follows: 27% towards operations, 22% for sales and marketing, 15% for our tech staff, 16% towards AI product development 11% towards GA expenses (inc. office space), and 10% held back for contingencies. These proceeds will help assist the company growth and allow us to market ourselves to a wider audience in London, as well as grow to key cities in the UK and potentially the rest of Europe.
The target market for Houzen’s products and services is landlords, initially in London, followed by the rest of the UK and with the potential for global reach. We class “landlords” as the organizations or individuals who have decision making power on the letting and/or management of a property, whether they are the property’s owner, the property manager or an agent operating on the landlord’s behalf.
Characteristics of target market
The private rented sector in the UK has grown substantially in the last 14 years, from 2 million households in 2003 to over 5 million in 2017. It is estimated that close to half of all residential lettings fees and commissions are earned through the London market, and one in four households in Greater London are a UK PRS household.
The landlord market split is highlighted in the diagram below. The beauty of the Houzen model is that it can serve all landlord types thanks to our product and operational flexibility.
On the agency front, we work with small and mid-size agents, who we estimate make-up 81% of the market.
Our model is easily scalable at low marginal costs across major cities in the UK and Europe, and potentially globally, that have a similar lettings market.
To put the growth opportunity that Houzen has ahead of it in context: Homelight, a US startup whose value proposition is to use transaction data to pair agents with consumers, has recently completed a 40 million USD Series B funding round.
We have identified four major landlord acquisition channels
1. Direct Sales to large portfolios
2. Partnerships with landlord-facing businesses
3. Innovative online and offline marketing
4. Product development and comms to drive referrals
Our approach is built on a deep understanding of the various segments, their pain points and specific needs. We focus on a personalised approach for each category of landlords whether it is neighbourhood centric, overseas landlords, etc.
A mix of original and partner-driven content across blogs, FB and LI allows us to appeal to a range of landlords without restricting our outreach.
We attend property-centric events in London, reaching out to landlords to showcase Houzen. Direct communication drives a large part of our marketing approach as we build trust and traction. We work with partners to get the word out via trusted channels. Most recently, we have also started our media engagement and will be looking at increased coverage over the coming weeks.
We view competition as the alternatives landlords use to seek out tenants.
1. Large corporate agencies, such as Savills, Foxtons (16% market share). These come at a high price point, 10-12% fees, with high service standards.
2. Midsize, and small independents (we estimate to hold 81% market share). Unpredictable and unstandardized service level, 8-10% fees.
3. Online agencies (we estimate to hold 5% market share): Low fees, low service and largely DIY.
4. Personal network: Landlords can reach out across their own network to find tenants.
Our research from aggregated portal data from Rightmove and Zoopla shows the top three smb agents (using coverage and time on market) are better performers on average than any of the letting options outlined above. Houzen has built its network by aggregating these top three agents from each neighborhood, providing them with the technology they need to compete. The results speak for themselves as we continue to acquire new portfolios and we outperform the agencies that have been historically assigned to these accounts.