Transforming the rental industry by building a more equitable marketplace for landlords and tenants.
Business overview
| Location | London, United Kingdom |
|---|---|
| Social media | |
| Website | www.howsy.com |
| Sectors | Property Digital B2C |
| Company number | 08845607 |
| Incorporation date | 15 Jan 2014 |
Idea
Introduction
When you look to the rental market, there’s little innovation or significant change on offer. The UK’s 4.2 million private rental properties are serviced by either tenant find only online services, high street agents or DIY landlords.
Now there is an alternative. No Agent challenges the traditional over-priced & under-serviced lettings model. Doing what our name suggests, we have created a digital platform that removes traditional agents, bringing down the cost of managing a property by an estimated 75% & delivering great customer service.
We estimate that No Agent taps into half of the current 4.2m private rental properties that are up for let. This is considerably higher than the 1m residential properties sold per year.
We invite you to join us on this follow-on round to scale No Agent to become the only way for landlords & tenants to rent.
Intended impact
PROBLEM
• Overpriced market.
Landlords & tenants pay high fees to traditional agents.
• Underserviced market.
Agents can be slow, inflexible & unresponsive to customer needs.
• Complex legislation.
Difficult for landlords to navigate the ever-changing laws & regulations.
SOLUTION
A fair ecosystem for landlords and tenants, without the pain points of traditional agents. Our proprietary platform uses automation & AI to book viewings, triage repairs and to prepare properties for let while our team supports both landlords & tenants throughout the entire journey 24/7.
• Saves landlords time & money.
Accessible fee model that passes on actual cost benefits, which can save the average landlord approximately £2000 in the first year.
• Reduces risk
One click compliance with the support of a property manager & legal helpline.
• Zero tenant fees.
No Agent has also signed a deal with Experian to be the 1st national agent to offer credit reporting on rent payments, helping tenants build their credit.
Substantial accomplishments to date
Over the past 12 months we assembled a world-class team coming from companies like Zoopla, Propertyfinder, Microsoft, Deloitte, Purple Bricks, Northwood and Fine & Country.
We scaled our marketing and developed a proven customer acquisition strategy that has resulted in the number of properties under management growing 30% on average per month between June and November 2017.
No Agent now has approx £230m worth of property under management and our churn rate is less than 1%.
Gillian Kent joined us as Chair (previous MD at Microsoft MSN & Propertyfinder.com - sold to Zoopla).
We recruited a Head of Product (Ebay/Shopping.com), a Sales Director (Ex Trinity Mirror Group) and expanded our non-exec board.
The underpinning technology platform had a huge update and a thorough redesign, we now have 24-hour live chat support and are patenting our AI repair triage system.
We had a strong response from the industry press, featured in Forbes, The Guardian twice, in TechCityNews, Startups.co.uk.
We are now Financial Conduct Authority (FCA) approved – which will enable us to grow our product offerings in the insurance and financial services space.
An agreement in principle has been made with EON to provide all of our landlords with free electricity during any void periods.
In the last 3 months we have processed over 9,000 tenant registrations.
November the biggest month in our history for new instructions. Our total landlord database increased in November by over 30%.
Monetisation strategy
The online rental sector is dominated by ‘tenant find only’ services that charge a one-off sum. No Agent’s business opportunity is its recurring revenue model.
We'll maximise the average lifetime value per managed property over 3 years through several revenue streams:
Fully managed service: For £55pm in London and £35pm outside M25 we market property, find, reference and credit-check tenants, close contracts, manage repairs, and perform regular inspections.
Bolt-ons: Landlords can click & choose the services they want. Our add-ons menu includes viewings, photos, gas safety checks, all for transparent, highly competitive prices.
Financial/insurance: With the recent Financial Conduct Authority approval, we are moving into the finance, insurance and investment markets with products for landlords & tenants.
Partner Referrals: We plan to work with several big players in utilities, broadband and tv sectors to offer additional products that will generate regular commission fees.
Use of proceeds
We are seeking investment to grow the business prior to seeking Series A investment in Q4 2018, for which we have had positive meetings and expressions of interest from institutional and trade investors. Post 2020, we plan for exit opportunities to trade buyers, private equity businesses or the stock market.
The funds will be used to:
- Scale marketing channels to increase growth and drive CPA down through marketing efficiency increases.
- Further technology advancement to drive innovation and add more automated features, including our patent filing legal costs for protection of the AI platform.
- Scope out further geographic and horizontal market opportunities for Build to Rent sector and platform.
- Roll out our first FCA regulated finance product for landlords & tenants.
The cost base for the next 6-9 months will be:
Customer Acquisition - 33%
Research & Development - 21%
Operations Centre - 23%
Administration - 9%.
Office Running Costs - 14%
Market
Target market
In a recent survey by Homelet 87% of landlords surveyed were using traditional agents.
This market is highly fragmented with 18,000 property agent branches offering local services. With a fixed cost base for property rents, high marketing costs and a reliance on people & manual processes, it's no surprise that the fees they charge are high and their service levels are low. With the Government's proposed tenancy fees ban, agents will also have to find ways to make up the lost revenue by passing on costs to landlords.
In addition, property tax changes came into effect in April 2017, hitting the profits of landlords. These changes phase out mortgage interest as a tax deductible expense when calculating rental profits, increasing tax bills & even resulting in losses in their property businesses.
As they look for ways to cut costs while retaining quality, we believe No Agent is an attractive proposition for the savvy landlord, giving us a further catalyst for growth.
Characteristics of target market
The UK private rental sector in the UK is a significant growth market. A recent PwC report indicates that the number of households in the private rented sector has more than doubled since 2001. According to projections, the trend will continue with a further 33% increase in privately rented homes over the next 15 years, resulting in 25% of all households renting privately.
There are currently 8.3million rental properties in the UK, of which our addressable market is the private rental market which accounts for just over 50% of this at 4.2million properties.
The market is also seeing the increasing presence of build to rent (BTR) developments by institutional investors. Some commentators suggest that these institutional investors will be increasing the market share over the next few years through investment of £80bn by 2030. We are in the early stage of entering this market and No Agent can help provide higher yields to these institutions through a lower priced full management service.
Marketing strategy
Our marketing strategy aims to increase our reach as an England-wide service, with an increased focus on areas where we already have a good base of customers:.
- Online: with a strong focus on PPC campaigns, tailored to the various landlord types.
- Events & Exhibitions: Property Investment Networks up and down the country.
-Regional property shows, exhibitions, sponsorships and speaking engagements.
- Partnerships & affiliate marketing.
- SEO, social marketing & brand penetration.
- PR & the national media. We have been featured in Forbes, The Guardian & The Mirror.
- Education marketing: using webinars & social media to create a marketplace of savvy landlords who want to save time, money & reduce risk.
-Recent webinars featured the top 5 accounting firm, Grant Thornton LLP, advising on recent landlord tax changes & also the Founder of Landlord Action, Paul Shampolina - who is also the presenter of Channel 5’s Slum Landlords, Nightmare Tenants - on how to deal with problem tenants.
Competition strategy
Purple Bricks have done a great job of disrupting the residential sales market with their comissionary messaging & direct challenging of traditional agents fees. Their £1BN+ market cap is a sign that the markets know the traditional model is outdated. This is further supported by the recent news that Countrywide & Foxtons profits have been devastated over the past 2 years. This is even before the tenancy fee ban comes into force, which could hit their revenues even more.
Currently most of the online rental sector is dominated by tenant find only services, who charge a one-off sum for advertising rental property on behalf of the landlord, and are left on their own to handle the property management.
Much like how Uber and AirBnB have transformed the taxi and holiday let industry, it is time the lettings industry experienced some real disruption. Our technological superior platform, great service & lower cost model places us in what we believe to be in a winning market position.
