Why We Are Dif.rent

Home rental made Easy

The Market — The Why.

“To solve a pain, you need to define the problem, to define the problem you need to understand the need, and to understand the need you have to experience the pain.” - Edwin.et al

These two words Generation Rent represent the feeling of hopelessness of millions of consumers.

You don’t even have to follow the mainstream (or social media) to understand we are facing an existential generation-wide housing crisis, from London to San Francisco, Stockholm to Sydney the flight to secure capital in the real estate market by investors has driven housing prices out of the realms of occupier affordability and into a speculative asset class — the London property market is no longer being described as a accommodation market, but ‘tower blocks of suitcases full of gold bricks.’ — the dysfunction is so great in the supply/demand equation that many (especially non-domestic) property speculators no longer even bother to rent investment property out — buy to let has become buy to leave, relying entirely on a speculative bubble to generate return on capital that drives prices still further out of reach of those that simply want to find a home paid for by a normal job.

We have reached a critical tipping point — either a catastrophic collapse in property prices needs to occur to bring purchase prices back inline with affordability metrics, or the entire rental system needs to be made as frictionless as possible in order to address the dysfunction in the market, and try and solve at least some of the genuine life-altering pain it is inflicting on entire generations of consumers.

At the heart of the problem are 3 issues:

1: Excessive liquidity is driving capital flight from unstable markets into high-demand rental locations where all the work for consumers is, and therefore property demand is strongest.

2: The amount of capital liquidity far exceeds that available to the general consumer through a salary funded mortgage product, therefore blocking them from becoming an owner-occupier in areas of high demand.

3: A lack of supply in those areas is driving rents upwards, meaning only those with the deepest pockets can secure accommodation, leaving both the most vulnerable members of society, and those individuals who are often poorly paid but essential to the proper operation of society such as nurses, doctors, firemen, police officers are unable to live in the communities they serve.

This perfect storm of lack of supply coupled to ever-increasing demand is creating marketing conditions where the very worst excesses of a market that is not held accountable by consumer choice, and the actors operating within that market are taking advantage of that imbalance to extract unreasonable, profits, perpetrate fraudulent activities and generally conducting their business in a highly abusive manner towards the consumers they supposedly serve.

In order to turn buy to leave back to buy to rent, we need to completely re-imagine the rental business process and management to remove the friction and inefficiencies, and encourages property owners to make empty investment properties available by giving them a highly optimised, highly integrated low-effort solution to bring the stock back to market, and use the technology we have to optimise yield to attract property owners to put their capital back to work in order to increase supply and ease the constraints that are driving property shortages, and creating an entire lost generation of potential through lack of social mobility. By increasing the market supply liquidity and more efficiently deploy and utilise the stock through proper rental pricing and yield management, we can create both improved returns for the investors in property, and better choice and availability as a result for the end consumer — in order to achieve this we need to really understand causality of the conditions that got us here. The sidestepping of tenancy regulation that renting property short-term through platforms such as AirBnB has caused due to the attraction of short-term profitability, has further put pressure on the stock available to consumers looking for affordable, long term stable rental housing options.

Why is the long-term rental system so broken?

In the UK at least, the notion of ‘tenant’ and ‘landlord’ is a relationship that was defined in a feudal era of robber barons and class-based privilege. Landlords used ownership of land as a mechanism of control to exert their influence over citizens for political or economic gain. Despite all the advances in the modern-era in tearing down bias and discrimination, improvement in human rights, the typical tenancy agreement still contains the type of language and control mechanisms that have no real place in a modern society and do little to nothing to protect the owner or the occupier from rogue actors.

Whilst almost all sectors of commerce have embraced the idea of customer first, customer always, landlords still often act not as a customer service business, but as a dictatorship you pay to live under.

The landlord decides if you can have a dog.

The landlord decides if you can have children.

The landlord tells you if you can have friends to say, how many, how often.

The landlord tells you that you can’t paint the walls, or put up a picture, the landlord punishes you when you break something accidentally, and does nothing to fix the deficiencies in the product you pay for.

The list could be comprehensive as to the level of injustice the desperation brought about by current market conditions is inflicting on an entire market of paying consumers and we haven’t even touched on the worst of it.

From holding deposit fraud, to exorbitant application fees, a system maintaining an out-dated model with gatekeepers who still thinks fax machines are a primary form of communication, and application forms require pen and paper — the frequently arrogant, obnoxious way they treat their paying consumers, the time wasted — it is a laundry list of how not to run a business in the 21stcentury.

A disconnected market that introduces friction at every step.

Property Search Portals — a user experience that mostly hasn’t been updated from when Amazon only sold books.

Letting Agents — from disproportionate fees, to out-dated communications, endless streams of paperwork and poor human decision making by often under-trained under-paid staff, and a market wide open to the bad actors perpetrating holding deposit frauds, fake rental contracts, and abusive practices that leave governments often struggling to catch up and regulate.

Landlords — Good landlords suffer with poorly vetted tenants, either the choice to micro-manage their property or pay excessive fees on their rental income for poor service from agents.

Beyond all of it, we have an entirely disconnected supply chain that introduces needless friction at every step, extra costs for both tenants and landlords through the inefficiency in processing a consumer traction, and a complete lack of customer aftercare during the delivery of what is still a consumer service — providing living accommodation for payment.

Due to property investment fuelled inflation, rent is now the biggest consumer purchase millions of citizens now make on a daily basis — and yet the entire process is almost byzantine compared with the ability to get an Uber, a coffee, or a pizza, rent a car, apply for a credit card or bank account all from a few clicks in smartphone app.

What is absolutely clear, that like fintech’s approach to dissolving the pains created by the banking and payment systems inability to embrace risk and innovation by updating business processes, the long-term home rental market needs to be radically rethought from start to finish to create a highly optimised, friction-free, end-to-end one point solution that more than anything delivers the level of customer focus and quality of service that befits transactions that run into often thousands of dollars on a monthly basis.

At dif.rent we have the answer — and we are going to change everything with one defining mantra

“Home rental made simple.”

— Edwin.

The Market Opportunity

Capitalism is still a great enabler of innovation — as Jeff Bezo’s famously said ‘your margin is my opportunity’. The extravagant array of fees charged by rental agents for poor to non-existent service to provide what is basically a CRM function which is now almost entirely delivered to Generation Z and Millennials via smartphone, and process a transaction agreement which can be completely automated through artificial intelligence and machine learning capabilities, with a complete intelligent contracts management system build with blockchain — the shift to consumer mobile has rendered the idea of the website -> sales office -> phone -> fax -> email -> paperwork business flow as obsolete as standing by the side of a street hoping a taxi comes by. Pretty much every function the letting agency carries out can now be automated leaving service providers free to deal with special edge cases and customers who need the greatest level of support. A by product of the automation by removing manual processing is the elimination of expense and the ability to deliver massive cost savings to both tenants and landlords, which increases market participation, and more intelligently matches housing stock to consumer need, provides better intelligence on investment yield opportunities and improves capital distribution to areas of opportunity, and therefore equalising the supply/demand equation to the benefit of all.

The market size of private long term rental contracts in the United Kingdom alone was estimated at greater than 5 million tenancy agreements — a number which continues to substantially grow as more consumers enter the market unable to raise the substantial capital and income requirements to support a mortgage.

What does this translate to for diff.rent?

Even capturing 20 per cent of this market in the U.K with a fixed fee of 49.99 per contract agreement and 24.99 a month fixed management fee, translates to both a huge cost saving for tenants, and to landlords who are often charged anything up to 10 to 15 per cent commission on their rent. 1 Million contracts at the indicative pricing represents a c. 350 million p.a recurring revenue stream — and that’s before you even add the additional revenue opportunities from providing a marketplace for partners to provide everything from home removals, to gardening services, insurance to utilities which in itself has the capacity be a substantial business opportunity once the customers are on board the platform — by creating a long-term management relationship that creates genuine value for the consumer in how they find, secure and then manage their rental transaction we have a powerful opportunity to capitalise on time poverty by automating many other related services into the proposition — automatic energy switching to the best tariff based on A.I based analysis of the tenants household composition and historical usage of the rental property, to optimising their route to work from their new home — we will build a compelling user proposition that delivers a real sense of quality of service that benefits both the supplier and the consumer.

This is a global opportunity — the housing market is as broken in many countries as it is in the U.K — and there are huge opportunities to bring better regulation and consumer protection by virtue of market power to emerging markets, where unbanked or undocumented citizens are often preyed upon by unscrupulous property owners.

Taken as a whole — creating an Uber of rentals where the technology enables us to take the best of mobile design thinking, coupled to A.I driven servicing, to change everything from the way we search and match property, to manage the application process to the on-going payments and maintenance, on a global scale, justifies our strong belief that diff.rent will take its place as the next decacorn opportunity.

The Social Mission

We live in a very different world, social accountability powered by the voice given to the unheard by social media is forcing organisations to address social injustice like never before. It’s not enough to simply come into a market to profit from it, you have to justify consumer trust by representing a product and service that meets the needs of the new generation of highly connected, highly vocal users.

We don’t expect to solve all the world’s housing problems, but what we can do is remove the actual real pain people are suffering that is wholly avoidable when a socially responsible company uses the technology at their disposal to use that technology to enable better outcomes for the consumer.

As a company we will be trusted with data on the lives and aspirations of millions of consumers — it is no longer acceptable to simply assume ‘the customer is the product’ and use that data for our own benefit and personal enrichment, but use that data coupled to A.I and Machine Learning to solve the problems those consumers face on every aspect of the transaction — better decision making, removing bias, working always to deliver a positive outcome for both parties, removing expense, risk and victimhood — all these goals are worthy uses of data that help us build a bond of trust with our customers that unlike the legacy industry, we are there to support them, service their needs and above all else treat them with respect.

It is not just empty idealism — the positive benefits in media and community relationships being a company with a strong moral sense of direction and purpose brings far outweighs any costs of delivering on that mission, but the truth is doing good isn’t easy — it’s going to take the brightest minds in our industry to help shape the conversion — people who benefit from the status quo are always resistant to change, and our key challenge is using our capability to deliver tangible improvements in quality of service, tenant covenants and yield on investment to make sure our supplying partners (the property owners) feel the benefits of supporting our ethos and code of conduct is in their own best-interest.