GENERATION START-UP
When Yazeed Al Shamsi was a student in the UK he had to hand over a full year’s rent up front for his accommodation. Finding it difficult, he looked for ways to pay the rent on a monthly basis instead.
After paying annual rent for two years, he found a solution, in the form of a lease guarantor.
“The company would come in and underwrite my credit risk to the landlord for an insurance fee and they would allow me to pay my rent monthly.
If I missed a payment, they would pay the landlord on my behalf,” Mr Al Shamsi says.
Inspired by this concept, Mr Al Shamsi, along with his friends Fahad Albedah, Mohammed Alkhelewy and Khalid Almunif, launched Ejari in Saudi Arabia, a rentnow-pay-later platform that provides flexible payment options for people renting a home in the kingdom.
The Riyadh-based start-up, which began last year, rents the residential unit on each customer’s behalf and re-rents it to them with a monthly payment plan.
In Saudi Arabia, tenants are required to pay the rent in one cheque annually. The new platform is expected to help those who cannot pay a year’s rent in full and opt instead for monthly payments.
“When a customer approaches me with his preferred choice of the unit, I screen them. I make sure he is creditworthy and doesn’t have any defaults,” says Mr Al Shamsi, co-founder and chief executive of Ejari.
“I then go to the landlord, pay the one-year rent up front and I re-rent it to the customer.”
“This model really works for everyone: for the landlord to get more customers and for the tenants to pay their rent on a monthly basis,” he says.
The company charges tenants about 15 per cent of the total rent as its fee.
It has financed up to $1 million in transactions since the platform was unveiled in the second quarter of last year.
“Since we started six months ago, we got over 1,000 applications and the value of that demand is over $10 million,” Mr Al Shamsi says.
Demand to rent homes in the Arab world’s largest economy is rising as more people move to the kingdom amid the expansion of its economy and government initiatives to encourage non-oil growth.
This year, Saudi Arabia introduced a regulation requiring firms to set up a base in the kingdom or risk losing out on government contracts.
However, companies with foreign operations below 1 million Saudi riyals ($266,000) can operate in the kingdom without local headquarters.
A number of global companies have relocated their regional headquarters to Saudi Arabia, boosting demand for homes as well as office space.
The kingdom hopes to have 480 global companies with headquarters in the country by 2030 amid efforts to improve economic output.
“The growing popularity of Riyadh, as it strives to become the regional business hub, has led to an increased demand for residential units,” consultancy JLL said in a recent report.
“This surge in demand was