Vesper Homes is a leader in the rental revolution.
An expanding residential services company, Vesper is at the forefront of the rental revolution. Its streamlined business model currently offers clients significantly lower fees whilst enhancing experience across the board. Vesper is currently a hybrid agency and now aims at deploying a leading edge technology platform, with differentiating client driven features and processes. The platform's objective is to improve service to both client and tenant in addition to an enhanced digital drive.
Turnover for 2015/2016 increased to 125k, a 350% increase on our 2014/2015 set up year. Vesper's revenue grew further in 2016/2017 by c.60%.
Vesper intend to continue to drive the lettings side of the business (currently accounting for 80% of revenues), offering a fully cohesive service right from the moment our landlords hand us their keys. A key focus will be to improve existing relations and strengthen its Asia-Pacific foothold.
• High estate agent fees - Landlords pay expensive fees, upwards of 11% with traditional estate agents. A cost likely to increase as tenant fees are abolished.
• Poor service - many agents persist in using procedures which, in our view, are outdated/inefficient and use limited technology, while new entrants may have poor local knowledge.
• Unfulfilled needs - we believe overseas landlords are not currently well catered for by traditional or online estate agents.
•Streamlining - Vesper's business model avoids some traditional expenses incurred by the traditional agencies thus cutting fees for landlords, typically by about 50%.
• Technology driven yet client-friendly service - our solution intends to incorporate the personal element of the traditional agent with a progressive Proptech platform.
• Expertise in the overseas market – we believe Vesper's experience in the overseas market (one of the Co-founders based in Singapore) and access to a corporate database will enable us to offer premium rents and increased yields to overseas investors.
Substantial accomplishments to date
Key accomplishments to date include;
• Established 2014, primarily focused on the London lettings market.
• Established residential sales & letting services using a single office with commission based, scalable hybrid model.
• c.680 registered lettings transactions since launch.
• 450 sales properties registered.
• c.11,500 users have visited the vesperhomes.co.uk website since January 2015.
• Existing database of relocation agents to help us find corporates prepared to pay premium rents.
• Relationship on the ground in Singapore.
• Strong track record in accommodating the needs of overseas landlords.
• 3 full-time staff, 3 part-time staff.
• Strong annual growth despite limited marketing to date.
• £125k turnover in 2015/16.
We will focus on UK based London landlords which we believe are overcharged/under serviced, and on the increasing number of overseas landlords, primarily in Asia Pacific.
We believe the current client base should increase due to the following:
• Reduced fees: Vesper’s fees include standard landlord services. With the number of commercial issues being faced by landlords, we expect our service offering to continue to expand to meet the market needs creating new revenue streams.
•Option of a Full Service: Additional services can be provided. Vesper aims to become a one-stop-shop for UK and overseas Landlords.
•Proptech and Digital effort: our objective is to provide a seamless service for landlords, thus delivering a significant conversion rate increase.Our aim is to further reduce fees for clients.
Use of proceeds
Vesper is seeking seed investment to grow the company. The seed funds will be used as follows:
•Investment in the development of a revised web base offering with fully-integrated operations, which we believe will benefit both Vesper’s clients and employees. We intend to label this as a Proptech platform and should generate additional online and offline marketing.
•Recruitment of 5 additional staff in 2017/18.
•Significant increase in our marketing budget to secure an increased share of the evolving London lettings market.
•Investment in the further expansion of the overseas business, primarily in Asia-Pacific. Vesper aims to open its Singapore office in 2018.
According to 2017 Savills research, the total value of the UK’s housing stock is now £6.79 trillion, 3.65 times the size of its economy. It has risen by £1.5 trillion in the past three years, and this figure has been heavily in influenced by the powerhouses of London and the South East, which together have accounted for over one third of the growth and London accounts for £1,709bn of the total housing stock.
The residential private rental sector is the fastest area of growth in the UK estate agents market. There are now 5.7 million privately rented homes, with assets valued at £1.29 trillion.
The residential estate agents sector grew by an estimated 4% over the past year, 2016, from £3.77 billion to £3.92 billion.
The lettings sector of the UK estate agents market has seen demand and income rise significantly over the past decade. The sector has grown as a result of several factors, particularly the growing reluctance and caution around purchases. Ultimately, in times of lower certainty, lettings tend to rise as they represent a more secure and less risky means of attaining property.
The 2017 Homelet landlord survey indicated that 79% of landlords use an agent.
Letting agents businesses have grown as the proportion of properties rented has risen, and they now represent an increasingly vital, and the strongest growing, income channel in the UK estate agents market.
Our focus is on developing our relationships on the ground in Asia and to bridge the gap between potential oversees investors and the London market, providing a complete service at a lower and more competitive price.
Characteristics of target market
The UK private rental market is growing extensively, due to reduced transaction levels and stricter lending criteria (Savills, 2016). It is predicted that, in the near term, the number letting may surpass sales for the first time in eight decades. The annual growth rate of average private sector rents in London increased to 4.2% in 2016, while rent levels are around twice the national average.
To avoid landlord profitability being decreased by emerging issues, such as the potential abolition of tenants’ fees, we believe many landlords will seek better value and service from more progressive providers. The vast majority of landlords use a letting agent - 79%, according to a 2017 landlords survey by Homelet, and we expect a change in this figure over the next few years with landlords foregoing the outdated and inefficient letting agency model in favour of more dynamic online and hybrid providers such as Vesper.
As Vesper services London in its entirety with the business focused mainly around the rental sector, it positions itself directly within a growing market. The flow of Asian capital into global real estate continued to accelerate in 2016, registering US$27bn in the first half of the year (CBRE), up from US$19bn for the same period in 2015. Of this, some 60% originated from China. Also, in H12016, US$6bn (22% of total outbound Asian capital) targeted at European Assets, primarily in London. (PwC Emerging Trends in Real Estate 2017).
The company intends to maintain its expertise and focus on lettings, with London property lettings, traditional and new build, supplementing the overseas landlord business. The international client acquisition focus will concentrate on China, Hong Kong and Singapore, the principal Asian investment regions.
Techniques we intend to implement to achieve our goals include:
• Partnerships: strengthening existing relations and building new partnerships with property developers, service providers, landlord associations and new overseas agencies.
• Technology features: Vesper’s website aims to provide instant information and complete transparency of market data. Our user-friendly calculator facility's aim is to help customers determine the prospective yield of their property and how much they are likely to save when marketing and letting the property with Vesper.
• Digital Marketing: a 3-5 year period strategy, targeting the London and overseas market, including Earned, Owned, and Paid Media.
• Targeted Advertising on property portals: use of banners, "valuation boosters" on Zoopla, and the Zoopla Adreach Marketing Tool.
• Use of PR and Marketing Agencies: to increase profile and build brand awareness.
• Education Marketing: Vesper’s website offers a step by step process for the landlord, with information on the London and overseas markets. This process focuses particularly on the ‘Buy-to-let’ potential investors.
• Incentive Schemes for referrals: offering rewards and incentives to existing clients, motivating them to refer their clients, with property needs, to Vesper Homes.
UK Competition Strategy – London:
We believe Vesper is ready to reap the upcoming benefits of its bespoke Proptech platform beyond it's existing hybrid position. Our aim is to capture a larger proportion of the London market.
Overseas Competition Strategy – Asia Pacific:
• Targeting overseas investors purchasing London properties off plan: an investor typically attends a property event and is introduced to the developer and their chosen estate agent. After the event, the purchaser can Google other agents in the area, and as a result may be introduced to Vesper’s services via digital marketing strategies.
• In our experience, foreign investors generally need agents who offer a full property management service, managing pre-completion enquires, snagging, furnishings and the final handover. They also often require agents to cover ground rent and service charge bills from rental income and assist with registering for NRL1 overseas tax status.
• With funds raised, Vesper plans to open an Asia-Pacific office, focusing on business development and building the ‘trust’ factor. Our experience suggests that our Mandarin speaking clients generally prefer doing business in their own territory and time zone. We believe that the new office will allow Vesper to compete with companies such as Chase Evans and JLL who already have offices in Singapore and Hong Kong.
• Improved branding and a new website should strengthen Vesper’s presence at the Chinese property shows. Additional research highlights the importance of strong relations in the Asia-Pacific market. Strategic development in this region should help us acquire a strong client base from this target market.
Vesper is confident that we are ideally situated to provide London’s landlords with a competitively priced property solution. Our negotiators will continue to drive business forward blending expert local property knowledge with advanced, innovative property technological solutions. By doing so, we intend to provide this fast evolving industry with more efficient and suitable services for the future.