It is fair to say that the Internet has dramatically changed the way in which businesses operate today although some would argue that the property market has been relatively slow to take advantage of the online arena. The emergence of online companies such as Spotahome now gives landlords and tenants another channel in addition to traditional high street letting agents, and for these agents a new business partner to amplify their advertising efforts.
Accommodating the growing private rental sector
The divergence in homeownership/private rental is enormous across the various age ranges in the UK. We have seen some monumental shifts since the 1960s and the 1990s, which kickstarted the UK homeownership trend, with the Conservative government’s right to buy policy. Data published by the Resolution Foundation, which monitors living standards in the UK, casts an interesting light on short, medium and long-term trends.
Age range 25-34
Back in the second quarter of 1989 homeownership peaked at 50.8%, falling to 25.4% in the second quarter of 2017. This is the only age range to show any fall in figures going back to 1961 (26.9%)
Age range 35-44
Figures going back to 1961 show that 29.9% of this age range owned their property, peaking at 70.1% in the second quarter of 1991. The figure now stands at 52.8%.
Age range 45-54
Homeownership in the older population began to grow as far back as the 1960s with this particular age range registering a figure of 40.7% in 1961 peaking at 75.3% in the fourth quarter of 1999. Recent economic turmoil has seen the figure fall to 63.7%.
Age range 55-64
Those aged 55-64 have certainly benefited from relatively low house prices in years gone by, seeing an increase in homeownership numbers from 36.7% in 1961 to a high of 77.33% in the fourth quarter of 2004. The figure has slipped back slightly in recent times and now stands at 71.8%.
Age range 65+
Back in 1961 figures show that 34% of those aged 65+ owned their own property and this figure has continued to grow gradually ever since. As of the second quarter of 2017 the figure stood at 74.5%.
Young professional market
These figures perfectly illustrate how the homeownership/rental market has changed dramatically for those in the age range 25 to 34. This is the only age range to show a fall from figures as far back as 1961 and there are real concerns that future wage increases will not keep pace with house price rises. Companies such as Spotahome are growing in importance, playing an integral role in the process of matching landlords and tenants in a timely, efficient and cost-effective manner.
What does Spotahome have to offer?
The term “disruptive” is used to describe companies which have literally turned historic business models on their head. The emergence of the online arena has played into the hands of companies such as Spotahome not only for landlords but also tenants. So, what exactly does Spotahome have to offer the modern-day landlord?
Main benefits of Spotahome
This rental platform basically brings together landlords and tenants in a timely, secure and extremely transparent manner. The ability to offer a focused wide ranging approach to property letting at affordable prices has seen many landlords looking at alternative channels from which to source their future tenants. For landlords, the main benefits of Spotahome are as follows:
• Free listing of properties on the Spotahome website
• Free high definition video showing property to its full potential
• Floor plans, additional property information and sales literature put together in an extremely professional and focused manner – all free of charge
• Tenants wishing to contact landlords directly need to place the first payment in a Spotahome controlled account to be released once agreement has been reached
• As potential tenants need to pay the first month’s rent in advance before communicating with a landlord, this filters out time wasters
• A moderate success-related fee is only charged to the landlord and the tenant when an agreement has been reached – these fees are significantly less than those charged by traditional high street letting agents
• Spotahome guarantee to address rental arrears
• Spotahome guarantee to address damage caused by tenants
• The depositing of the first month’s rent in advance ensures a fraud check can be carried out once a booking request has been accepted
Once the landlord has accepted a booking request for the rental of a property the first payment will be released by Spotahome, 48 hours after the tenant has moved in. This ensures time to check for defaults in the property and rectify any issues.
Zero recurring fees
Once the first tenant payment to the landlord has been released from the Spotahome controlled account, and the success fees paid by both parties, there are no ongoing fees payable to Spotahome. The property listing will remain live in the event that a new tenant is required in the future but this is also free of charge. All legal agreements will be between the tenant and the landlord, Spotahome will not be a party to the ongoing relationship. However, there is a growing reference library if either landlords or tenants require additional information.
Conclusion
It is not difficult to see why companies such as Spotahome are prospering. They have created a transparent online letting portal, appeal directly to young professionals in the age group 25 to 34 (the fastest growing area of the rental market), creative a flow of constant potential tenants and offer landlords the opportunity to make use of moderate success related fees.
The historic business model whereby properties were advertised for a minimum period, at significant cost, with no guarantee of success and additional service fees is dead. The online market has a far greater reach, greater transparency and with relatively low running costs (compared to traditional letting agents) this business model is much more flexible.