A private rental market app that pits tenants against each other in bidding auctions to win favour with landlords will launch in London this year, Rentberry founder Alex Lubinsky has told Techworld.

The controversial service launched in the USA last year and quickly attracted anger from tenants associations for encouraging price gouging, including in areas already suffering from systemic housing crises and soaring homeless populations - San Francisco, for example. 

Image: Olympics redevelopment site in east London Image credit: Wikimedia Commons
Image: Olympics redevelopment site in east London Image credit: Wikimedia Commons

Rentberry seeks to displace estate agents as a middleman between landlords and tenants, in way that's reminiscent of how Uber edged traditional cab offices out of the market. 

Landlords sign up and add their property including pictures, amenities, a description, and a "guide price" of suggested monthly rent. Tenants fill out their online application and attach their credit reports. They can then view the suggested monthly rent, the highest offer, and the amount they're willing to put down for a security deposit.

The app has understandably been met with anger by tenant rights groups. Nonprofit group Tenants Together told San Jose Inside: "It's profiting off of a housing crisis, and I think that it just shows how you have to regulate this market because it does lend to so many opportunities to take advantage of tenants.

"How awful to promote something that aims to get the highest price on something that people need. Can you imagine if someone auctioned milk or medicine? People would be outraged."

The context is that many cities in the United States and across Europe are experiencing unprecedented problems with housing and homelessness.

In London, new properties that are marketed as affordable housing can be advertised for as much as 80 percent of the going market rate. Manchester is facing a homelessness epidemic twinned with a population that is growing 15 times faster than homes are being built.

The scrapping of planning regulations has led to Barnet Council in London converting old office space into 'dog kennel' flats – 40 percent smaller than an average Travelodge room. 

All of these controversies mean Londoners are understandably wary of landlords, estate agents, and government complacency – or worse, complicity – in the housing crisis.

Of course, Lubinsky isn't personally to blame for existing social conditions or government inaction. But it is sure to leave a nasty taste in the mouth of the UK's citizens without property. Lubinsky says the company is in "deep discussions" with partners and hopes to launch in the UK in "30 to 60 days".

Lubinsky insists that the reason the platform has been met with such fierce criticism is that people are frightened of technology.

"We are definitely controversial because until now nobody else has done it," Lubinsky says. "Some people are afraid of new technologies. There is a category of people like that, but there are tens of thousands of others who love new technology, and they utilise Uber and Airbnb across the world."

The platform came into being in 2015 when Lubinsky and his business partners were looking for a private rental space in San Francisco, a notoriously expensive city. Lubinsky says the problem wasn't so much inventory as that "this whole rental experience was horrible".  

"You need to waste a lot of time looking for properties, communicating with a landlord, go to the open house to see the property and you have no idea what kind of competition there is," he says. 

"People submit different offers, you want to negotiate the price, but you feel uncomfortable. Not many people like to go through the negotiations face-to-face."

He and his partners decided to "build something which would create a real value for the tenants and landlords". They raised $1.2 million last year. The company is now raising its second round of financing and has brought in a 50 percent commitment so far at $2.5 million. The investors are all "high profile angels", according to Lubinsky, including an individual from the Carlyle Group.

Lubinsky believes that the bidding aspect of the service has been overplayed. Instead, he says, Rentberry offers a way for users to get discounts on rent while also finding better-suited tenants for the landlord – in other words, people who might have better credit ratings.

Left to its own devices without caps and regulation, private rents tend to rise – especially when there is scarcity in housing stock and a large, growing population. This is the case in London and it is difficult to imagine a service that further encourages competitive bidding having anything but an exacerbating effect. 

Rentberry claims to have saved tenants 5.1 percent in rent since it started operating but will not share the data. 

The sense of the app is that it is a product of crises and inaction, one that would probably not attract so much controversy if the private rental market wasn't plagued with case after case of unethical practices, snap evictions, and extortionate rents on properties barely fit for purpose. 

Director of housing nonprofit Generation Rent, Dan Wilson Craw, tells Techworld"When you have a market as fundamentally unhealthy as the London rental market, no amount of transparency is going to improve things for consumers.

"The best thing entrepreneurs can do for London's renters is figure out how to build more to bring down rents in the first place. Without a sufficient supply of homes, rents will keep ratcheting up and auction systems will just make the pain more acute."

Lubinsky insists that his app does help to bring rents down, but it will be a case of wait and see. He also acknowledges that this is a problem that can only be solved by government tackling fundamental issues of inequality and wider issues around housing.

Regardless, it's hard to conclude anything other than that until this is addressed seriously, businesses will seek to profit from crises – whether they're apps or otherwise – and Rentberry is sure to attract controversy this side of the Atlantic too.