A new online lettings business is banning landlords from charging any fees to tenants, and says it is keeping its own charges down to just £20 all-in. It says some online agents are ripping tenants off. It also insists that all properties advertised must be genuinely available.
OpenRent co-founder Adam Hyslop said that in an online survey, it asked 420 tenants about their main frustrations when renting.
The top two complaints were out of date property listings (87%) followed by agents’ fees (76%). Other complaints were about poor service from agents (65%), fake listings (28%) and misleading or poor photographs (25%).
Hyslop said: “All of us as tenants have been there. We spend huge amounts of time browsing online to find somewhere we like and can afford, but when we talk to the agent or landlord, we’re told it’s no longer available. It’s really infuriating, especially since some ads are obviously left up on purpose just to get us to call, so an agent can give us the hard sell.”
Hyslop said it was his own bad experiences renting in London that made him team up with fellow Oxford graduate and private landlord Daz Bradbury earlier this year to launch OpenRent.
He said: “By taking listings only from private landlords and putting in place strong community features, we ensure that every property tenants see on our site is available to work.”
He said that landlords using the site are prevented from charging tenants’ fees.
Hyslop said: “We’ve very deliberately built a site that’s a great experience for both parties.
“Landlords list with us for free and get their property advertised on Rightmove, Zoopla and all the major property sites.
“We offer contracts, payment services and deposit registration for free, and referencing at cost – which is £20 per tenant.
“Setting up tenancies on a strong legal footing is in everybody’s interest, and needn’t cost hundreds of pounds.”
Hyslop also criticised other online agents, saying: “Many offer no better value than traditional high street agents.
“Over the past few years, services have appeared which offer to cut out much of this cost for landlords who are prepared to ‘self-serve’. For an upfront fee, these online letting agents offer to market properties on popular property sites to find interested tenants, while the landlord carries out viewings and deals with the tenants directly.
“But some charge nearly £300 upfront for a listing and we found one agent charging £200 each to tenants for referencing.
“We’ve found that many so-called online letting agents are simply high street agents with a website. While they might claim to offer a cheaper service, they have the same cost base as their offline cousins and are playing the same game of ripping off landlords and tenants while providing a mediocre service.”
Comments
I expect anyone can make that business model pay because basically they don't do a lot.
They advertise your property and provide a few templates but everything is automated and done online. Its easy to build web services to automatically upload your deposit to the protection scheme or send tenants details to a referencing agency etc. The only significant costs for the business are internet connectivity and hosting fees, inital development work, ongoing advertising fees, digital signing subscription, plus a fee for a standard AST agreement. The tenant pays for their own references. You proably don't even need idemnity insurance if you're not giving any advice.
The company dont really make any calls (only SMS) and there are no mailing costs, they probably have no experienced letting agents to pay or highstreet rates. The landlord has to do everything themselves including picking a rent level, taking photos, creating the listing, contacting the tenants to arrange the viewings, doing the viewings, doing the check in, inventory and check out, negotiating any deposit disputes, maintenance, complaints etc etc etc.
The service could be really good for some exeperienced landlords who want a hands-on approach, but it's far from sutiable for everyone.
Yawn ... it hasn't been two weeks since the last one of these, what's going on ??
Predictions of the next article of this nature ?? 8 days for me.
Totally agree with the comments here, this article is not "News", just blatant advertising for which LAT will have taken a fee.
I thought LAT would be such a publication that stands up for all decent letting agents, not bashing us all down untill we charge nothing.
£20 per let is a business producing a loss. My guess is it's part of their business plan to make a loss initially. Once they gain traction (and of course they will charging landlords £0 and tenants next to nothing), they will probably start adding charges elsewhere in an attempt to make the business profitable.
For now their plan is to knock anyone else who charges a fee (the whole industry), win over the consumer, then we'll see what changes they implement.
Word of warning to them, running a unprofitable letting agency is not like starting a social network that is unprofitable. Twitter was worth silly money when it wasn't making money because it's ability to gain members was limited only in places where Internet was scarce. Other than that, the worlds population was their market. How many do it yourself landlords are there in the world? You'll go bust way before you find enough of them giving you repeat business to prove your customer base.
I'm intrigued to see how and when you'll be profitable.
Nice succinct summary of the flaws from Mark. Excellent posting from Ray Comer who appears to prove that their claims are bull5h1t. Great bit of satire from Bollinger. I even liked IO's "straight-to-the-point" posting.
I';d like to add something original but between you I think you've all got it covered.
PLEASE PLEASE PLEASE let us all know how any business model that charges no costs other than a £20 reference Fee can fund itself. Based on a profit of £5 per reference ( A full profile can be obtained for £15 although you state it is at cost!!) I would require to take on 2400+ properties a year just to cover my internet uploading costs.
The main debate going around at present is all about transparency of fees....come out into the open and let us all see were you make your profit.
I assume that you are not regulated and therefore have no requirement to do so.
Of course, this article fails to mention the little reported rumours at the ill-fated attempt at running an on-line supermarket - OpenSmashandGrab.com.
Co-Oxford-Chum Adman said "we thought it was a great idea. There was a demand and a gap in the (super)market . We carried out an extensive survey of all the year 3 grads, in our stream, and without exception the TOP complaints were - had to actually pay money to buy things in the supermarket (95%); turning up at the supermarket and finding out that they had deliberately run out of baguette (45%) and gross photographic misrepresentation of ready meals (12%) - that's one of Persil's pet hates as his Papa runs a ready meal national conglomerate which takes real pride in accurate representation on their packaging."
Adman continues "the business model was simple: people could easily, and free of charge, simply LOG ON to the website via the internet, choose the products of their choice, click "add to basket case", and then choose their preferred method of delivery - via email or post. The best thing was that there were no delivery charges, or even any charges whatsoever! Not even for the products. What could have been better? There are too many supermarkets out there simply ripping people off by charging money for their products. It's just not fair. So everything (except Persil's Dad's Ready Meals) were FREE. The site was probably one of the most successful websites EVER. Word got 'round campus and then Oxford and we had over 10,000 users within 2 weeks. I even bought a new car. Sadly, we had to close the site quite unexpectedly as I could no longer afford to pay Persil rent on my house and the losses were beginning to make a rather noticeable indent in to the profit and loss of Persil's Dad's PLC. I think we learnt many lessons from this not least of which was Oxford's insatiable demand for supermarket Champagne, most of which is piled up in Persil's triple garage. "
http://www.openrent.co.uk/property-to-rent/milton-keynes/3-bed-detached-house-on-trubys-garden-mk6/1088
http://www.openrent.co.uk/property-to-rent/london/2-bed-detached-house-on-grove-road-sw19/1425
http://www.openrent.co.uk/property-to-rent/london/room-in-a-shared-house-on-besley-street-sw16/910
There are loads more out of date properties on their website, take the story down LAT, its blatant advertising for a company that can't even keep to their own service promises
It makes me cry with laughter every time one of these bozo's pops up with their 'new concept' online letting agency.
Online you may be but you are NOT a letting agent. You're an advertising medium for let only landlords.
Fail already - I searched for a house on Openrent this morning and the first one to come up says it was taken off the market on the 23rd November!! Love to hear your reasons for leaving it on the website.
Lets see if you're still in business in a years time at '£20 all in'
Would love to hear how these guys would provide a better service...?
There are reasons why agents charge what they do! It allows them to grow as any other business does in any other industry. It also allows them to be more service orientated against their competition and finally it allows them to take on more employees so that they can accompany viewings, negotiate deals, set up agreements professionally etc etc etc.
Very frustrating that there are so many stupid people that think creating a website, slating the competition and then putting a press release out will win the day. Think again guys.
Am I the only person in the UK not to be running an online agency of some description?
Still nice to see Daz come clean about charges - don't think this business model will wash though!!