Tenancy deposit replacement scheme raises over £9m in financial backing

Former Savills chief executive Jeremy Helsby is among backers who have helped deposit replacement scheme flatfair raise $11m (£9.07m), chiefly from Americans.

The funding round was led by US venture capital firm Index Ventures and included Helsby, Revolt Ventures, Adevinta, Greg Marsh, founder of Onefinestay, and Taavet Hinrikus, founder of TransferWise.

The deal is in dollars as Index Ventures and some other investors are US-based, but flatfair will need to transfer the funds into sterling.

Franz Doerr, chief executive of flatfair, said: “Like much of Britain’s housing stock, its rental sector is stuck in the Victorian era.

“Thankfully, cutting edge payment technology can boost transparency, build trust and make instant move-ins a possibility. This is a great competitive advantage for landlords. Renters and policymakers have been trying desperately to improve standards across the market.

“Now, with institutions like Legal & General and LaSalle funding build-to-rent homes alongside thousands of highly professional private landlords, we’re seeing higher standards of service filter through the entire market.”

Martin Mignot, a partner at Index Ventures,  will join flatfair’s board.

Mignot said: “Around $300bn is tied up in deposits globally, so freeing up just a fraction of this money would make a huge difference to millions of renters who deserve a fairer and more transparent service.

“But flatfair has the potential to become the ‘Paypal of property rental’ by offering a range of solutions beyond referencing and deposit management.

“There is huge potential for technology to help real estate companies streamline operations and revenue management, while offering tenants a better, fairer service. flatfair is already working with global companies like CBRE and Greystar to do this and I am very much looking forward to supporting the company on an exciting journey ahead.”

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10 Comments

  1. DASH94

    Leaving aside ‘rental sector stuck in the Victorian Era’ – (Yes, positively Dickensian we are) – and the bit about building trust (wouldn’t really need deposit protection  if we had that), trying to become the ‘Paypal of property rental’ is only a good advert for anyone who’s never had a dispute handled by Paypal in the past 10 years. JMHO – but I think tenants already get a good,  fair service.   It’s landlords/agents that need a break at the moment.  I’ll be sticking with the DPS. Deeply distrustful of these replacement schemes – even ones that seem to have a better understanding of the UK market.    
     
    Sorry – a bit angry of Tunbridge Wells there.  🙂

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  2. Mark Walker 2

    Is that for the future PPI mis-selling style legal fund?

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  3. Scottish_Mist42

    Have received a very professional and compelling sales pitch for this product, and we were very tempted to go for it.  However, I just have a nagging doubt in my head that won’t shift, so decided to ‘wait and see’ what happens in the next 12 months.

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    1. RedRebel

      Flatfair and similar services are the way forward. With many things you only have to decide to lead positive change in the market or let your competition do it. Eventually you will have no choice but to get on board. It’s not about what you want, it’s about what your customers want.

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      1. Lil Bandit

        Do they pay you per-post or on a retainer system @RedRebel?

         

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  4. Ian Narbeth

    So what if, worldwide, $300bn is tied up in deposits? How many tenancies are involved? What does that even mean? Does it include commercial rent deposits? How may billions would be OK? $200bn, $100bn? What has the number got to do with “a fairer and more transparent service”? What is unfair about setting aside, say, £1000 for the period of the tenancy and, if you have paid rent and not damaged the property, getting every penny back at the end? OK so you have lost £10 in interest you might have earned. Would you rather pay £300 and not receive any of it back even if you were an exemplary tenant?
    Flatfair and other “deposit replacement” services will add to overall costs for tenants because they need to run the scheme and make profits. Tenants will think (they may even be led to believe by disingenuous agents) that somehow they are avoiding liability. They are not. Tenants will remain liable for damages at the end of the term, only it will be Flatfair pursuing them under indemnity provisions rather than the landlord having to argue it out with the DPS, TDS etc. Monthly cost for this “fair and transparent” service is likely to be 4-6% of the rental amount (of which some will be rebated back to agents for selling the insurance. At least they can develop a new income stream now that the Tenant Fees Act applies). I agree with Mark Walker 2 that we may well have a mis-selling scandal. This is being encouraged by the current totally ludicrous Government consultation on “passporting” deposits.

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    1. RedRebel

      Negative thoughts about change are why this industry is in the dark ages

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  5. Lil Bandit

    I still don’t understand what happens when the tenant decides to leave and doesn’t pay with this scheme.

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  6. WiltsAgent

    It’s ‘cutting edge technology’, ‘more transparency’, ‘currently in the Victorian Era’.

    Every box ticked on my B****hit Bingo checklist. Another chance to rack up huge losses and cash out before the need to make a profit.

    I wonder where they got the idea.

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    1. RedRebel

      Ask your customers if they rather pay 5 weeks rent to you upfront or prefer to use the cash elsewhere. Let them decide! This is the attitude that is holding EA back and forcing our fees to nose dive

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