Business ideas for 2018: ‘Generation rent’ solutions
With renting cheaper than buying in half of all UK cities, the ever-growing rental market is ripe for disruption in 2018
“Millennials. Walking around like they rent the place.” So joked Twitter user @SpenceDen, and tongue in cheek or otherwise, the sentiment certainly resonated with fellow users.
Receiving hundreds of thousands of likes and retweets, the one liner was more than just a witty remark, but represented a growing phenomenon among millennials.
Indeed, whether taking a cue from their European neighbours, or just owing to rising costs of buying, the truth is, more and more Brits are opting to become long-term renters rather than first-time buyers – and this presents a myriad of opportunities for start-ups.
With a surge of innovative businesses in the proptech and insurtech industries coming to the fore in recent years, 2018 will similarly see a range of services targeted specifically towards a group increasingly being referred to as ‘generation rent’.
Whether it’s helping them wade through the murky waters of home insurance, pay cheaper rent as a property guardian, or even just manage bills in a shared flat, look out for an increased demand for tech solutions that help aide generation rent in 2018.
Starting a business to help generation rent: Why it’s a good business idea
Undoubtedly a sore spot for many, the rise in renters partially owes itself to the uncertain economic and political times we currently live in.
With the number of renters across the UK more than doubling since 2001, recent reports have found that 20 million people in the UK (that’s 39% of all adults) currently lack the funds necessary to buy the property they currently live in – and so are forced to rent instead.
Perhaps unsurprisingly, this figure jumps to 49% among Londoners – with a separate report revealing that those in the capital have average monthly rents of £1,861, compared to monthly mortgage repayments of £3,001 – a whopping 47% gap.
Interestingly, 27% of Brits have said they would invest in a cheaper buy-to-let property in a different part of the country to where they live, in order to earn additional income while not having to compromise on the place where they wish to live – a sure sign generation rent have money to spare.
A gloomy outlook for wannabe-homeowners but an exciting opportunity for wannabe-business owners, nearly half of all renters don’t envisage themselves buying a property in the next five years.
And with renting cheaper than buying in half of all UK cities, who can blame them?
But, don’t just take our word for it, further proof that helping generation rent could open many doors for you this year exists in the spate of investments into start-ups doing just that.
Take Urban Jungle for example. The London-based fintech that wants to revamp home insurance for young people raised £1m earlier this month, and was backed by a whole host of Angel investors including Rob Devey, the ex-CEO of Prudential UK and HBOS insurance.
Using machine learning to better assess risk, the start-up hopes it can prevent millennials from being excluded from the home insurance market.
Testament to the diverse number of sectors rent solutions lend themselves to, Ideal Flatmate, a housemate-matching platform, successfully closed a seed funding round back in July 2017.
Using a bespoke algorithm to match potential housemates based on their compatibility, users are given a 20-question survey upon registration, which accesses data on personality, lifestyle and sociability.
Still not convinced?
Research from Knight Frank says that institutional investment into the build-to-rent sector will rise by 180% over the next six years – with levels of investment growing from £25bn this year to £70bn in 2022, as pension funds and other investors inject cash into purpose built blocks of homes for rent.
Generation rent business opportunities
Given the innumerable elements involved in sourcing, living in, and eventually exiting a rented property, a whole host of services and sectors can potentially lend themselves as suitable solutions for generation rent.
Focused on improving the relationship between landlords and tenants, Liverpool-based RentalStep is a collaborative platform that allows tenants and landlords to review each other in order to help inform users’ decisions.
A winner of the Start-Up Series, Startups.co.uk and Worth Capital's monthly seed funding competition, the start-up has nearly 1,000 tenants and over 100 landlords and agents registered – a strong sign of demand for such offerings.
While most people breathe a sigh of relief once they get the keys to their new flat, sometimes this can be just the beginning of your problems – particularly if you move in with frugal and evasive housemates who just won’t cough up and pay their fair share.
Start-ups that tackle the minefield of problems that can come from having to share a home with strangers – or even friends will no doubt find themselves in high demand in 2018.
Fintech-come-proptech app Acasa, for instance, allows its app users to manage and split costs for everything from their energy, broadband and water to their TV license provision – with council tax to be added in the future.
Or what about tackling the problem of actually finding a decent rental property?
Proptech start-up Lowe Guardians provides affordable living for millennials in central London in a very innovative way.
Solving two very big problems within the rental market, (namely vacant properties and people in need of accommodation) millennial renters act as ‘property guardians’, keeping a landlord’s unused building safe and secure, in exchange for heavily subsidised rent in zone 1 and zone 2.
A ‘free’ form of security for the property owner, while also a source of income on what would otherwise be a vacant building, the tenant benefits from getting to live in central London among a community without the astronomical costs.
Similar solutions could prove popular in other major cities around the UK. Or why not think about another disruptive way of maximising non-conventional properties for renters?
US app Sortly is assisting rentals in the moving process itself, another avenue you could explore.
When it eventually is time to ‘up sticks’ and hopefully move on to bigger and better things, the inventory and asset tracking app helps you create an itemised list of what exactly you’re packing – and how much it’s worth.
A problem that won’t go away anytime soon, generation rent need your help – start your own rental-related business now!
Jimmy Williams, co-founder of Urban Jungle, said:
“Building services for renters is a really interesting area to start a business, not least because it is growing so fast.
“Renters are a really interesting target customer too. They are much younger on average, so tend to be more tech savvy, and are used to doing things digitally.
“There is so much around the renting experience which is outdated, paper based and/or broken, that there are many problems to work on. In our experience there is lots of customer frustration around the whole process.
“I’m sure we’ll see lots of new innovation in the space in 2018. I would guess the most successful will be those who look at the whole rental experience and pick the big problems which are being least well addressed today.
“That could be helping customers as part of the rental process itself (think deposits, inventories, repairs), issues renters face (finding housemates, cleaning, paying bills), or even supporting established businesses already in the space, like large landlords or letting agents, to do what they do better.
“It’s definitely an exciting time to be in the space.”