We talk to Mike Georgeson, Founder and CEO of online rental platform RentalStep, about how landlords and tenants can work together more harmoniously, why there’s no substitute for saving and what the thinking is behind ‘RentalStep Redi’, the new mortgage tool.
What is the thinking behind RentalStep? What inspired you to set it up?
RentalStep was born from my frustration, as a landlord, over the excessive costs charged by letting agents to both landlords and tenants. As an example, I was charged £250 for a tenancy agreement and my tenant was also charged the same amount – for what was, essentially, a piece of paper.
My first idea was a ‘Tenant Passport’ where tenants can build their online rental record over time, which verifies to future landlords (and mortgage providers) that they have paid their rent on time and respected the property – so we built it.
I also wanted their rent payments to count towards an improvement in their credit score – so we went into partnership with Experian. I also wanted free tenancy agreements and free referencing for both landlords and tenants – so we built that too. I then wanted to provide great additional services for landlords so we have built many of these and continue to add more.
What do you hope to achieve with it in the next five to ten years?
We want to transform the rental market by being the most respected online rental platform where landlords and tenants work together to make renting a great experience. We want people to Rent Happy!
How is it different to other similar products and apps?
We are the first platform that connects tenants directly with landlords, and the first that has totally free referencing, credit checks, tenancy agreements and issue reporting.
We truly believe that the future of renting will be a more collaborative experience for both tenants and landlords. Lettings agents will go the same route as travel agents – there will be a lot fewer of them providing bespoke management for top end rental properties. Most rental transactions will occur online with all parties having access to reviews of each other.
What do you see as the main barriers to getting on the housing ladder for millennials?
The cost of housing in some areas, especially in the South East, is so disproportionate to younger peoples’ salaries that the idea of ever being able to buy a property is just a dream. This is obviously not the case in all areas, but most areas of the UK have experienced such high rises in property values that the deposit needed to secure the property, and the monthly mortgage payments, are just too high for many millennials.
Millennials are often caught in the trap of paying a lot for their rent and so cannot even begin to save for a deposit, while at the same time, with rising house prices, the mortgage required to purchase is increasing constantly.
If you were prime minister for a day, what would be the one policy you’d introduce to improve the rental experience and make the transition to buying more achievable?
For millennials wanting to buy a place, I would introduce government loans to cover their first deposit which would be paid back when they moved to their second property.
What advice would you give to millennials who are currently renting but looking to get on the housing ladder?
Save, save, save, whatever way you can.
Our Tenant Passport can help you improve your credit score but ultimately it is down to your affordability and the size of your deposit that determines your eligibility for a mortgage and the size of that mortgage.
We will soon be launching our RentalStep Redi service which helps millennials assess just how ‘Mortgage Redi’ they are and tenants can get personalised help to save for a deposit while improving their credit score.
Do you think millennials approach personal finance differently to other groups? Is the industry doing enough to cater to these differences?
I think there are lots of millennials who are actually happy to rent for possibly their whole lives, as the flexibility that brings is quite appealing. But, once they start families of their own, this view can change. Stability for their family becomes a higher priority and with it more of a need to ‘settle down’.
I think the lettings industry needs to look at these changes as great opportunities to offer different style tenancies to different demographics, perhaps personalised to each individual circumstance.
I think there are many millennials who would rather have ‘experiences’ than own their own home. This should be embraced by the industry with flexible tenancies the norm and, for instance, maybe providing ways to easily allow someone else to take over a rental for a short period when the main tenant is off on their travels.
How well do you think millennials are coping when it comes to budgeting and personal finance?
I think millennials are actually better prepared than my generation was. The information and advice available now is so much better than 20 or 30 years ago, although the opportunities to use this advice are fewer.
I think in general, millennials are just as well equipped, if not better, to handle budgeting and personal finances than previous generations.
If you could give millennials just one piece of advice about personal finance, what would it be?
Get the balance right. Save as much as you can but enjoy life as well – you’re only young once!