(Reuters) - HomeRenter, a new British online property lettings website backed by newspaper publisher Trinity Mirror is to be launched on Monday, offering to cut out the role of traditional letting agents and the hefty fees which they levy on tenants.
These fees, which go towards the cost of conducting viewings, verifying references and drawing up contracts, have become an increasingly important earner for traditional agents as a shortage of affordable housing forces more people to rent each year.
However, their sharp rise has inflated the cost of renting and fuelled public anger, prompting the British government to last year announce plans to ban such tenant fees.
HomeRenter’s Airbnb-style online marketplace would allow renters to circumvent such fees. Instead, the business intends to make its revenue by tapping the estimated 2 million landlords who own fewer than three properties by charging them an annual membership cost of 99.99 pounds ($130) to showcase properties.
“High fees and poor service on offers from traditional agents created the momentum to build HomeRenter,” Chief Executive Will Handley, the former managing director of Trinity Mirror’s news businesses division, told Reuters.
“We firmly believe that through the digital means you can cut out the middle agent and create a world in which landlords and tenants enjoy happier tenancies.”
If successful, the site could pose a further challenge to traditional estate agents such as Countrywide and Foxtons, who are struggling in a cooling market in the face of Brexit uncertainty and facing rising competition from online rivals such as Purplebricks.
Recent results have shown online agents gaining traction, with Purplebricks having forecast a more than doubling in first-half revenues. Countrywide and Foxtons have reported profit falls.
Property market experts say a growing number of people are being attracted by the cut-price fees of online estate agents in Britain, which means that a number of sites, including Gumtree and Spareroom, already allow people to find rooms to rent without an agent.
However, where most other platforms target younger landlords and tenants in their marketing, HomeRenter is also attempting to tap under-serviced markets such as ‘mom and pop’ landlords and is in talks with institutional landlords such as The Collective and LIV Group.
“Where we stand versus anyone else offering online lettings is that (we’re) trying to create a marketplace ethos,” Handley said.
HomeRenter’s partnerships also give its members limited-period access to online property market portal Rightmove and Zoopla.
The company, which currently lists under 50 properties, has got 780,000 pounds of seed funding from Trinity Mirror and residential group Q Developments. Handley expects HomeRenter to seek fresh funds in the first quarter of 2018.
“Building a self-sustaining model organic marketplace is no mean feat ... we will be looking to bring new money onboard to help us achieve that,” he said.
Reporting by Esha Vaish in Bengaluru; Editing by Greg Mahlich