The smart digital source for buy-to-let mortgages
Property Master's vision is to bring the benefits of the increasing digitisation of the property and banking market to private landlords, via the buy-to-let market.
We have access to a unique database of lenders covering more than 2,000 buy-to-let mortgage products, some of which change on a daily basis. For more information about the database access please see the final section of this page. We're confident our landlord customers can be sure the mortgages we present to them are the best deals. Additionally, the offers we present are already pre-screened for acceptance against institutions lending criteria. Our typical landlord customer could save £1,800pa with just a single click.
Like most markets ripe for disruption, the buy-to-let mortgage market is highly fragmented. There are around 12,000 brokers operating in the field typically tied to a limited panel of mortgage lenders. The use of technology is patchy to poor leading to a time-consuming and expensive process for landlords. We intend to revolutionise this customer experience but our plans extend beyond mortgages. Private landlords have the need for a wide-array of allied products such as insurance and conveyancing. Over time our aim is to become the destination site for the private landlord community.
Our proposition is well-timed as we straddle developments in both the private rental sector and more generally in both the finance and property markets. The private rental market is undergoing a transformation as landlords adapt to a range of regulatory changes and now rising interest rates. Taken together, we see these developments are bringing about a greater professionalisation amongst landlords and an appetite for faster, cheaper funding solutions not met by the current fragmented, largely paper-based traditional mortgage broker.
In the world of finance, new rules for banks which come into force in early in 2018 will force them to make available their valuable customer transaction data to competitors so boosting over time competition in markets including mortgage lending and encouraging still further digital solutions to the financial needs of customers such as private landlords.
Our customer proposition of cheaper, online, easier-to-access mortgages is designed to appeal to the approximately 2 million private landlords, buying around 20,000 mortgages a month. We believe this activity has been boosted by both the changing customer marketplace and the advent of the new rising interest rate environment. Buy-to-let remortgaging activity reached £2.4bn in October, an increase of 20% both month-on-month and year-on-year.
For Property Master, helping landlords find the right mortgage means that we engage these customers at a key purchase point, offering a timely opportunity to intermediate purchases of additional services such as conveyancing and insurance. It also means we capture as part of the mortgage application process data which can be of value to third parties, such as insurers and lenders. In time we aspire to become the destination of choice for online landlord services and we have already developed a suite of online tools designed to support the running of a property portfolio.
Substantial accomplishments to date
To our knowledge, we have developed the first whole of market buy-to-let mortgage search capability.
We have established a strong board of experienced, seasoned executives, many of whom have held senior positions in financial services businesses.
We have recruited key IT development and operational management staff, and established an operations centre office. We have 10 staff.
We have achieved Financial Conduct Authority (FCA) Direct Authorisation to conduct regulated mortgage sales, enabling us to sell all residential and buy-to-let mortgages.
We have secured funding of over £600,000 from a broad mix of private investors and a minority stake from LSL Property Services, whose brands include Your Move and Reeds Rains. LSL Property Services offers an additional route to client access.
And we have launched the service to positive industry reviews and attracted over 10,000 landlords to date. Over 200 mortgage applications have been made to date, exceeding management forecasts.
Now that the primary technology build and launch are complete we are ready for expansion and this fundraising round will enable further automated application processing and the expansion of our marketing campaigns.
Property Master receives a commission fee from lenders in a similar manner to other brokers. On a market average buy-to-let mortgage of £150,000 we expect to charge commission of £675.
A proportion of mortgages will not be standard cases, requiring the individual attention of a qualified mortgage broker. These clients will be charged a fee of £295.
Many landlords have multiple mortgaged properties, so these clients represent a recurring income stream.
Property Master will act as a fee based introducer for associated services such conveyancing and insurance.
We intend to continue to develop a uniquely comprehensive range of online landlord services enabling convenient management of properties at lower cost, including sophisticated portfolio finance tools of interest to landlords with multiple properties. This will form a bundled premium service which will attract a membership fee.
Property Master is a data business, capturing detailed requirements and attributes which can be of value to third parties such as insurers and lenders.
Use of proceeds
Funding is required to enable further development of our automated application processing capability and the expansion of marketing campaigns to drive customer volume.
Future customer acquisition requires an expansion of channels to include pay per click (PPC), affiliates, and sophisticated remarketing. We expect that an investment in PPC will drive volumes and reduce acquisition costs.
Development of the automated application processing capability interfacing directly with lenders operations is vital to reducing our overheads as volumes expand. We've seen that lenders have been slow to automate interfaces and Property Master intends to pioneer this solution.
Please note that the Company does not own or maintain the database of mortgage products. Rather, it has a licence agreement with E-Solutions Software Limited, trading as Market Monitoring, who own and run the database. Certain key details of the agreement are as follows. In addition, the agreements are available to download if you would like more information.
- The CEO of Property Master is also CEO of Market Monitoring.
- It is an exclusive perpetual licence.
- The licence costs £3k per month and there is an additional revenue share mechanism depending on the total amount of revenue.
- The licence can be terminated at will with 12 months notice and there are fees to be paid by the terminating party on a sliding basis depending on the timing of termination.
- If the service fails then fees are payable.
- There are additional step in rights if services are not provided.
Property Master is expected to appeal to the majority of UK landlords, however our primary target audience are experienced and professional landlords (typically 40-60 year old with multiple rental properties). We believe these landlords value being in control of their finances and will be increasingly questioning whether traditional brokers who disintermediate them from a full understanding of the choices available really are getting them the best deal on the market.
We believe that Property Master’s capability to run “what if” scenarios and whole of market searches will help landlords feel more confident in their finances and make informed decisions based on intelligent choices about mortgage finance.
There are other factors at play. The combination of the tighter lending standards, tax changes and government action to improve standards generally in the private rental sector is forcing landlords to approach running their properties in a much more professional manner. We believe this creates a gap for a player such as Property Master that can not only provide landlords with access to good mortgage finance deals but also overall general support in the form of a range of landlord-friendly products and online business tools.
Characteristics of target market
The private rental sector has more than doubled since 2001, from 2.3m to 5.4m, and this trend will continue with an additional 1.8m households privately renting by 2025 – the so called “generation rent”.
We've seen that landlords have been quick to capitalise on a stable long-term return often as an alternative to traditional pensions or investment. There are currently around 2m landlords in a market worth £1.4tn.
Almost half of all private rented properties are purchased using a buy-to-let mortgage, totalling 20% of all mortgages. A rising interest rate environment - unknown for the past ten years - is boosting demand for remortgages and in the third quarter of 2017, 39,100 remortgages had been issued, up 6.3% compared to the same period in 2016.
This is where Property Master comes in – we provide a simple, clear, and smart digital mortgage platform that answers the question “what is my best property finance solution?” with a one-click purchase.
Property Master’s digital approach provides a platform to reach our target audience and acquire customers cost-effectively. We will focus on digital marketing, making use of established landlord information portals, networks and social channels. Pay per click (PPC) is the driver of medium term growth, with additional channels such as SEO, affiliates, aggregators and digital remarketing.
Our digital platform and use of intelligent notifications will ensure continued engagement in our solutions.
Initial launch has made use of solus emails and site advertising to the membership of established landlord portals such as LandlordZONE and Residential Landlord.
The next stage of growth will come from PPC and the digital marketing agency Equimedia has been engaged to deliver this.
We believe that our quality of information and neutral stance will support high levels of referral and re-purchase reducing customer acquisition cost.
Property Master has exclusive access to a unique database of all buy-to let mortgage products and lender criteria. We feel that this, combined with a sophisticated search algorithm, makes Property Master not only completely differentiated in the market but also makes it extremely hard to copy.
As far as we are aware, Property Master is the only digital player mortgage broker in the buy-to-let market. There are a number of emergent part digital players in the residential market, notably Habito and Trussle. We do not believe that their data sets, algorithms and regulatory regime are aligned to digitally service buy-to-let mortgages.
There are 12,000 traditional brokers operating locally in what we have observed is a fragmented market with few substantive players. We believe that they typically display:
• High cost of doing business: lack of scale, expensive advisory staff.
• Lack of digital offering: face to face, phone and post.
• Lack of transparency: Review only a few lenders, complex fees.
• Commission, not customers: low loyalty, poor customer experience.