The digital agency shaking up the property world

Ben Shaw’s digital rental agency has shaken the foundation of the property industry with its innovation, transparency and key selling points

HOUSEME WAS founded based on Evidence THAT THE residential RENTAL MARKET is systematically flawed for both tenants and owners. CEO and co-founder Ben Shaw is passionate about fixing this.

‘My biggest motivation for creating an agency was that my friends weren’t allowed to apply for a mortgage based on the colour of their skin. The process is still unfair and hopelessly outdated,’ says Shaw. ‘I was also concerned about pricing. I found that, even with my own rental applications, after talking to the landlord I realised that neither of us – and not even the agent – had any idea what “fair” rent is and should be.’

To solve the problem, the first thing Houseme introduced was an “auction mechanic” where tenants could place bids on accommodation. Shaw was also driven to create employment and help ease the lives of the less fortunate. ‘As a privileged and educated Allan Gray Fellow, I believe that God has given me an opportunity to help others. It might be in a small way, but

I’m determined to do so.’

He explains that challenges like scammed deposits and ridiculously high application fees – along with racial discrimination – make things difficult for prospective tenants. Landlords also experience hardships because of poor tenant behaviour, missed rental payments and procurement fees.

Enter Houseme: a specialised, digital-rental agency that provides core services to landlords and tenants. Essentially, it professionally manages rentals for the parties involved, minus the risk, hassle and cost. ‘Renting through us means you only pay 2.5% for lease management, including collections, reporting, maintenance, advertising and renewals,’ says Shaw. ‘We also verify each user so there are no security risks, and hold onto the deposit on behalf of the tenant. By using Houseme, both landlords and tenants gain access to our additional services, such as Depositfree renting for tenants, and our rental guarantee for landlords. These are used by almost 70% of the people who’ve signed up with us.’

Described as an industry disruptor, Houseme uses technology to make the entire rental process seamless and more efficient. ‘Agencies that charge landlords a full month’s rent just to place a tenant cannot operate on a scale where they match us on costs – although this isn’t Houseme’s largest differentiator,’ says Shaw. ‘We have an advantage because of the data we’ve accumulated and use to understand our customers. We can offer them services they actually want. We have the highest collection rate in the industry and our own rental income guarantee for landlords. This is all thanks to our database, which, of course, improves and gets more detailed every month.’

As for the reason disruptors are considered a threat to traditional businesses, Shaw says: ‘Although disruptors can threaten traditional business by finding better and more innovative ways to approach the same customer, this pushes the market to grow – which helps the entire industry.

‘By growing Houseme this quickly, we’re creating a direct link between landlords and tenants that removes agents as the “middlemen” of the process. While this is a potential threat to regular agencies, it could also turn out to be mutually beneficial. Most industry disruptors actively seek ways for incumbents to collaborate.’

Houseme can also help prevent you from falling into rental traps. Shaw says another one of Houseme’s most important duties is helping landlords to understand that a month’s vacancy can amount to a significant loss. ‘It means you’ve lost 8.3% of your annual return. To help, we’ve created Placeme, a feature that lets the leasee negotiate the rental amount so that properties aren’t left vacant. We encourage landlords to take part in these negotiations so that we can help them find other people to move into their property faster.’

Another pitfall Shaw says Houseme helps its customers to avoid is the lack of transparency and information when it comes to contracts. Our team of experts helps tenants and landlords understand the lease, the requirements of both parties, the property’s peculiarities and the processes involved when renewing or cancelling the contract. ‘We’ve had a very low number of disputes because of how much we care. We’re committed to sharing as much information as possible,’ he says.

Shaw goes on to shed some light on the two categories that make up the residentialproperty-rental market; namely, procurement and management.

The former refers to tasks such as advertising the property, vetting a tenant, and the industry-standard of charging one month’s rent so an applicant can secure it. The latter refers to tasks such as collecting rent and other payments, attending to emergency services and deposit negotiations.

‘Agencies charge an additional 5-10% each year,’ says Shaw. ‘Houseme’s model for all of this is just 2.5%, with the option of taking up additional services, such as having professional photographs of a residence taken, for a once-off fee.’

Property is an extremely large market in Africa, with the money made from residential rentals amounting to over

R120 billion per year. ‘It just so happens that it’s also an industry with a lot of gatekeepers.

Because of this, there hasn’t been much in the way of innovation,’ says Shaw. ‘That’s why it’s the ideal industry for a tech entrepreneur.’

Houseme now operates nationally. It has over 100 000 users and accumulates R130 million in rental payments per year, from thousands of managed properties – all this was accomplished in three years, by a team of 30 people.

‘I think people don’t consider that the other big-name estate and rental agencies have had decades to build their legacies and gain their reputations. We’re only beginning to define ours.’

Since its inception, Houseme has also caused a stir in the

South African property industry with its transparent management of finances. ‘South African agents charge a commission from landlords. This is usually the amount of one month’s rent,’ reveals Shaw. ‘Apart from us, there’s no agency we’re aware of that can guarantee yield for the entirety of the lease. If they can’t guarantee yield for the entirety of the lease, this means that if a tenant wishes to leave a contract before it ends, the agency fee could end up amounting to a percentage of six months’ rental, as opposed to twelve, as an example. This makes it an incredibly high, non-transparent fee structure. Houseme charges a flat 2.5%, no matter how many months the tenant rents with you. They also typically charge an application fee from tenants. On average, this amounts to R927, putting further pressure on tenants.

To help ease the liquidity squeeze on tenants, Houseme launched its Depositfree feature, which offers a qualifying tenant the chance to pay a little more rent every month for their dream home – without having paid any deposit fee at all.

‘This is a first in Africa, and an enormous number of people took up the option within its first year,’ says Shaw. ‘We’re in a position to do this because of our excellent tenant-reviewing system and the data we gather about our customers’ needs. The tenants we’ve looked at have the highest collection rate in the country, which makes the idea of working with us that much more attractive to larger property managers. That, combined with our foolproof income guarantee, means you’ll never lose out on rental payments ever again.’

Then there’s the Assist package, tailor-made for landlords who need a property managed in another location, say, a popular tourist town a few minutes away, or even another province. The deal comes with a professional photographer, who shoots attractive images of the residence, hosted viewings, inspections, key handovers when tenants move in and access to emergency services. However, Shaw says the feature is only available in Cape Town and Joburg at the moment. By being ahead of the curve in the field of South African property technology, Houseme plays a crucial role in the difficult economic time we’ve found ourselves in. Shaw says this gives the company an advantage, in several ways.

‘With our decreased rates, we’re easily accessible to more tenants and landlords than our competitor agencies. We offer everything, from affordable rentals at around R3 000 in Cosmo City, to ones at around R30 000 in more upmarket places such as Sandton. In addition to our permanent staff of 30, we also provide contract and freelance work for close to 80 people. Our rapid growth has resulted in scale, which gives us access to the valuable data we operate with. We’re proud to be able to share our insights with our users, to enable and empower them to make better decisions about property.’

Shaw’s vision for Houseme is to make it the largest, long-term property letting platform in the country. ‘We’ll continue to build products and services that solve tenants and landlords’ problems and alleviate stress. Our goal for the next three years is to become one of the top four largest rental companies in South Africa,’ he says. ‘That aside, we’ve also been asked if we’d consider going international, and we could look at broadening our offering to something more than solely residential rentals – but I can’t share anything further at this time.’

And while Houseme may be the underdog at the moment, overlooked as a serious competitor by traditional agencies, the company is popping up more frequently on property managers’ radars. ‘As we acquire more business, we’ll continue to grow, and hopefully work with the agencies that want to maintain the status quo. Unfortunately for them, disruption is very much here – and so are we.’

‘although disruptors can threaten traditional businesses by finding better and more innovative ways to approach the same customer, this pushes the market to grow’