Ever since the first wave of internet property portals launched back in the early noughties many industry experts have predicted that the deeply traditional lettings market both in the UK and beyond would eventually be disrupted by internet-only and hybrid alternatives.
And in some ways, it has come to pass. Airbnb and Booking.com now dominate most city’s short-lets sectors, and hybrid agents like Purplebricks, Upad and OpenRent are working hard to take over the long-term lets market.
But Spotahome is different. It is tackling the medium-term lets market and a few weeks ago hired a former senior Uber exec as its chief operating officer, Cleo Sham.
She’s a former Mckinsey business analyst educated at Cheltenham Ladies College who worked for Uber for two-and-a-half years, most famously helping establish its operation in China including in Beijing and Guangdong.
Spotahome has been going for over a year in London and has approximately 4,500 properties listed on its site and growing, although Sham admits the site has some way to go yet until it is a major force in the city. Airbnb, by contrast, has 75,000 and within Spotahome’s launch market, Madrid, it has 7,500 properties.
“We’re offering a different model – we’re not an agent but a platform in between the landlord and the tenant trying to make information within the sector more transparent,” she says.
The site has operations in Barcelona, Berlin, Brussels, Dublin, Lisbon, Milan, Rome and Valencia and all these sites offer versions both in English and the local language. But Sham says London is one of its most important markets.
“We’re still small in London so I feel like we’ve only just got started – it’s such a huge market and it’s the second biggest in Europe by number of rented properties, and the biggest in terms of money spent. We’ve got a way to go,” she says.
Spotahome is also, as far as Dealmakerz can tell, unique in London. Best described as a mix of the functionality and business models of Purplebricks, Rightmove and Airbnb, it provides a platform for tenants to sign medium-term rental contracts for a property. The average for the site in London is between six months and a year.
But Spotahome is not a classified site. Landlords, developers, property managers, letting agents, build to rent developers – in fact anyone who owns a property – can upload a home to the site.
This means it should avoid one of the key problems with hybrid classified lettings sites – fake listings and scammers.
“The co-founders and I have all rented in different rental markets across the world and we’ve all come across fake listings in China, for example. Spotahome was born from some of these frustrations,” she says.
“We think that quality is a differentiator in this market and so are secure transactions – I like to think of us as a ‘curated selection’ that overall is designed to improve the rental experience.”
The platform’s network of freelance home checkers (who wear the company’s T-shirts) verify the details of the home, take photos and a video, and create a floor-plan.
Sham claims this small army of freelancers, who tend to be flexible workers or students, is also a huge differentiator in the lettings market who also help Spotahome localise its presence and verify properties in an unbiased way.
“They are not paid by the landlord, nor do they represent the tenant. They are a neutral third party.”
Once the property is ready and the listing goes live, a tenant can then book it and pays a holding deposit to secure it. The tenant then transfers the deposit and the rent to Spotahome which does not release the money to the landlord until 24 hours after the tenant has moved in.
This provides security to both parties, the landlord knows the first months rent is in place to secure the property, and the tenant knows the money is safe and especially if the property is not as it should be. In subsequent months the tenant pays the landlord direct.
“We only on-board the tenant – we are not involved after the tenant and landlord agree to the rental,” says Sham.
“But if a tenant is unhappy with the property when they arrive then we help them find an alternative including covering some of the hotel costs if necessary.”
Landlords are also handled differently compared to other lettings platforms, and charged differently too. Spotahome writes and prepares the listings for the landlord and adds local and facts about the area via its content team, as Airbnb does.
As well as the listing it provides landlords with damage insurance cover of up to €500, and also pays up if a tenant fails to pay the rent.
It charges a 6% fee on the total contract value of a booking, although it offers discounts for anyone bringing portfolios of properties to its site.
“The co-founders and I have all rented in different rental markets across the world and we’ve all come across fake listings in China, for example. Spotahome was born from some of these frustrations.”
Cleo Sham, Spotahome.com
On face value Spotahome looks like it’s competing with Rightmove and Zoopla, but Sham says it is not.
“Ours is more of an end-to-end experience for the customer and unlike these portals, we operate across Europe,” she says.
This European network of sites has been instrumental in getting the business off the ground. Its early adopters have been ex-pats, students and corporate re-locators moving around Europe’s big cities, but Sham says it’s been getting more local traction too.
“A larger proportion of tenants particularly in Madrid are people who are already resident in a city and average tenancy and contract lengths are getting longer,” she says.
Spotahome’s pitch for medium-term tenancies also helps it steer clear of the controversy and regulations that have dogged Airbnb and other short- and holiday-let sites.
“Different cities have different definitions of what vacation rentals are – so it’s 90 days in London, 32 days in Barcelona and 60 days in Berlin. We adapt ourselves to those different limits in order to comply with them,” says Sham.
“Some landlords use us as their primary listings platform and others use it as a complimentary one on top of their holiday rentals on sites such as Airbnb to fill in the seasonal gaps.”
And she point out herself, it’s a new ‘mix and match’ way of renting out properties that no one imagined could develop when Rightmove listed its first properties all those years ago.