Property tech (proptech) has been on the rise recently as internet savvy buyers, comfortable with the likes of Uber and Airbnb, want an easier way to buy, sell and rent property without dealing with expensive and ineffective estate agents. Here’s our pick of the bunch.
We will start with the only company that has gone public on this list, Purplebricks. The online-only estate agent uses “local advisors” to try and smooth the buying and letting process out and can save money by not having a physical presence on the high street.
Founder Michael Bruce explained the idea behind the company to Startups.co.uk: “Using our local property experts on the ground and a unique online platform, Purplebricks allows people to oversee every aspect of their property transaction as it happens, at the touch of a button, rather than waiting for an estate agents office to open.”
What Purplebricks does differently is charge flat rates, which help transparency and, most importantly, saves consumers money. Purplebricks charges £798 (up from £599 pre-IPO) to sell your property (except in certain London postcodes where it is £1,158), compared to the average rate of 1.8% of the property price traditionally charged. This leads to average savings of £4,572 for sellers, according to Purplebricks.
The fully-managed letting service is £66 per month, with a flat fee of £299 (£199 pre-IPO) or £599 in London, and Purplebricks provides a full set of 24/7 management tools. Local advisors offer support to sellors and lettors and will take photographs, create a floor plan, write a description and prepare the advert for online aggregators like Rightmove and Zoopla.
Purplebricks listed at 100p a share at IPO on London’s AIM exchange in December 2015, valuing the company at £240.2 million (high street estate agents Foxtons, by comparison, has a market cap of £537 million).
Brother and sister Paul and Gemma Young founded and launched Settled in 2015 after Gemma left her job at Google. Settled is a platform that allows homeowners to cut out the middle man when selling a property, much like Airbnb but for sales.
Much like Purplebricks, property owners can pay Settled £299, who will then visit your property, take photos and create a floor plan before placing adverts across all of the major portals (95% of all property searches in the UK are online, with Zoopla and Rightmove the dominant aggregators). You can arrange bookings remotely and Settled provide support all the way up to completion. Settled claims to save customers £4,400 on average.
Gemma Young, Settled’s CEO, told Techworld: “We’re very focused on homes rather than houses, so sellers that love their homes are enabled to have real conversations” with potential buyers.
Young saw the opportunity arise from a system that doesn’t put the consumer first, saying: “People aren’t that fond of estate agents as it happens, so it’s a bit of a broken system with very little regulation and wildly different service levels.”
This is where Settled comes in, by offering a more personal, transparent service: “There’s lots of smoke and mirrors, and models built around a sale and volume of sales,” says Young, “generally one in three or four properties will fall through after an offer, and we are finding it extremely low, less than 0.5%.”
The startup moved into the Garage Soho incubator in 2015 as it looks to improve its brand awareness. Settled has completed its second round of seed funding (amount undisclosed) with the Garage Soho.
The newest startup on this list is Nested, a London startup which promises to help homeowners to sell their property in 90 days, or they will give you the money to make your next purchase interest-free.
Nested was created by former GoCardless founder Matt Robinson, former Songkick CTO Phil Cowans and a former business consultant.
Using algorithms built by Cowans Nested provides sellers with a property valuation within seconds and guarantees a minimum price from day one, promising to sell the house within 90 days or give them the money. Nested will review the quick valuation and organise an inspection before confirming a guaranteed offer and placing adverts on property portals like Zoopla and Rightmove. They even take care of the viewings.
In exchange for a guaranteed sale Nested charges a minimum fee of 1.8 percent once you close a sale. Nested will then take another twenty percent of any money that is made on the sale above the algorithmically decided value.
Co-founder and CEO of Movebubble Aidan Rushby has one aim: putting the renter first.
Anyone that has rented a property will know the familiar frustrations: trawling property aggregators to find the property, ringing the agent, being told there is already an offer, inflexibility. Movebubble’s app ensures that properties are actually available, saving on that all too common feeling that your chasing ghosts.
Movebubble started out with the lofty aim of cutting those pesky estate agents out of the process altogether, but, as many of the companies on this list have found out, inventory is key, and the agents are the gatekeepers. “Originally when Movebubble was created we believed that renters don’t want to deal with agents,” Rushby told Techworld, “the reality is they will rent the property from wherever it is. The way we look at it Movebubble is there for the renter, and the agent is there for the landlord.”
The app learns your preferences and tries to filter out undesirable properties the more you interact with it and helps filter out bad agents using an Airbnb style feedback loop. Movebubble is also trying to bring more transparency to the rental business, which is traditionally a black box, so how many times the property has been viewed and if there are actually offers in place will be integrated into the app.
According to Rushby, Movebubble currently lists around 70% of all property stock (13,537 according to the demo version of the app I was shown) in London and this comes 95% through estate agents, with some larger landlords topping up the inventory.
Currently Rushby is seeing the user base growth as quite slow, with just 30-40 downloads a day, with the majority of successful rentals being completed by fellow young tech professionals. For the time being Rushby is just concentrating on the product and building the user base, concluding: “Movebubble is here to make the experience for the renter unbelievable so they go through it seamlessly, then we’ll look at how to monetise that.”
Movebubble rasied a £1.2 million round of venture capital funding in February 2016, bringing total funding up to £2.1 million.
Rentify works just with private landlords looking to rent out their property. The company operates on a hybrid platform, cutting out the expensive high street agents in favour of a 24/7 help desk and ARLA certified “property specialists”.
Founder George Spencer explained the business to Wired.co.uk as: “We are a technology-enabled letting agent, in the same way as Amazon is a technology-enabled bookstore.”
Rentify allows landlords to post an advert, perform credit checks and issue a tenancy agreement all online. Landlords can also manage tenants through the platform including deposit protection, online inventory and rent processing, with 24-hour customer care on hand.
They take a 4% commission on a no rent, no fee basis, as opposed to a high street agent like Foxtons which tends to take around 15%. The company claims to have 200,000 independent landlords signed up to the service.
At first glance Rentify is far more focused on getting landlords on board than a base of renters at this time, with consumers only able to request details on properties and no specific benefits listed on the site at the time of writing. The company does claim to advertise 1,450 properties each month, but doesn’t state how many are let out.
Rentify has raised more than £8 million to date, including a £1.3 million crowd funding round through Crowdcube.
5. Appear Here
Taking a slightly different approach to the rest of the startups on this list, Appear Here concentrates on the retail sector, specifically short term rentals and pop-ups, by linking retailers with landlords to find the best spaces available.
Appear Here works with both landlords that are looking to find short-term tenants for their space (for example Boxpark, Westfield or market stalls) and brands/retailers that are looking for the perfect space to display out of (such as Apple, Dior or even artists like Jamie XX). Getting established brands to use the platform gave Appear Here a solid portfolio of case studies to show off, and this helped reach the tipping point of convincing landlords to list their space.
Founder Ross Bailey took an interesting approach to spending his first batch of seed funding. At just 22 years old and straight out of a School Of Communication Arts post-grad he spent most of the cash on ”editorial, copywriters, designers.”
When investors questioned his prioritising of aesthetics over the technology he explained: “We would go to landlords and they would say: “This doesn’t happen online” and were just really against everything we were doing.” So he needed a website that they would want to be seen on, only then could he secure the required inventory to match the retailer demand he knew existed.
Formerly there just wasn’t a platform for flexible use lettings, according to Bailey, with lets taking six months on average to close. Bailey claims that on Appear Here that is down to 48 hours, as they provide all in one pricing (rent, rates, utilities and transaction fees) as well as an online payment platform and standardised legal approval through their partnership with Forsters LLP.
Bailey is now working on pushing Appear Here out into new “retail cities” in 2016 and finding ways to leverage their unique data. “We are the only ones out there with an understanding of where every brand wants to be, what they will spend, what the next street is, so we have a huge ability to aggregate that data and understand really interesting things around the market,” says Bailey.
Appear Here received £5.8 million in Series A funding led by Balderton Capital in November 2014, which will be spent on international expansion into “key retail cities” and expanding its customer service capability.
6. Virtual Commercial
Another proptech startup focusing on more commercial property is Virtual Commercial. Former commercial property manager Andrew Vertes set out to become the “UK’s first online commercial estate agent.”
Vertes actually describes Virtual Commercial as “Purplebricks for commercial property” as he saw an industry resistant to technology. “Property, especially commercial property, is a dinosaur. It is considered an advantage if you can send an email really,” he told Techworld.
For those not well versed in commercial property management the incumbent model looks a bit like this, according to Vertes: “You get an instruction, you market it, secure a tenant. The agent gets a fee on completion, some marketing costs upfront and a percentage of the value on the premium.” This works out as roughly 10 percent of annual rent, two percent of freehold sales and a raft of additional fees.
Virtual Commercial on the other hand sets a flat fee, hence the Purplebricks comparison, starting at £999 for a starter pack and access to the online platform. The average London agent fee, according to Vertes, is closer to £5,000.
The starter pack consists of 12 months of advertising and a 4x3 ft Virtual Commercial board to fix to your property. The platform allows property owners to manage all leads and enquiries. Phone queries are answered by the Virtual Commercial 24/7 freephone service. All leads are held in one place, where you can manage viewings, track progress and add notes. Virtual Commercial also provides training, support and templates for the relevant paperwork and referencing processes so that property owners can become their own agent.
Virtual Commercial has bootstrapped its funding to launch this year and outsourced its developers to build the platform, so it is still early days. However, if they can carve out a niche in the very lucrative commercial property market they could benefit from taking this approach and being first to market. The main question will be if property owners see a £4,000 saving as worth the extra work of becoming their own agent.
One of the younger companies on this list, Nanoget is essentially a messaging service that allows landlords and tenants to communicate without having to go through an agent when logging issues, reporting problems and requesting services like handymen or plumbers.
London-based startup Nanoget moved into the Pi Labs at London’s Second Home office space in 2015 and is now concentrating on its product ahead of a launch in 2016. It has only received unspecified seed funding at this point.
Ben Shemie said that it should be easier to attract customers at the lower end of the market. Shemie doesn’t go along with the common line of thought in this sector, that agents are anathema, though: “At the top end, yeah, agents are good at what they do, because they get the customer to pay more, so sellers obviously like that.”