UK proptech companies improve homebuying for the residential market
Before proptechs, buying and maintaining a home could be an inefficient, time-consuming and confusing process. Would-be buyers needed to search out property listings, visit estate agents, and drive around neighbourhoods to find suitable properties. It was a complex system with many touchpoints involving estate agents, solicitors, conveyancers, mortgage brokers, lenders and surveyors.
Buyers spent hours communicating with each of these professionals, typically, for a fee. And this was only the start of the buying journey. Once the contract was signed, homeowners faced the task of sourcing trusted tradespeople for repairs and renovations, or finding tenants for buy-to-let properties.
Step 1: Homebuying via property portals
In the past, homebuyers would typically engage a local estate agent to help them understand the local housing market and find a property. The online property marketplace was one of the first proptech categories to emerge, with the formation of Rightmove in 2000. As the UK’s largest property portal, it has developed products for developers, agents and homebuyers for over the past 20 years. Buyers can access an extensive supply of free-to-view listings, as well as a number of helpful tools such as a mortgage calculator and price comparison reports. Agents, developers and vendors get a one-stop shop for promoting listings, generating leads and boosting brand awareness, as well as a place for accurate valuation information and market data.
In 2022, Rightmove is still the market leader in this space, receiving 127.5 million visits per month. Property portal Zoopla is the second largest in this category and attracts 50 million visits per month. Like Rightmove, Zoopla is much more than a listings site, offering buyers functionality such as an interactive “SmartMaps” tool to isolate individual streets and specific areas. Zoopla also features an “estimated running costs” panel on every listing to show approximate monthly costs of mortgage, energy, water and council tax bills.
OnTheMarket is a recent mover within this space, advertising thousands of properties 24 hours before they appear on Rightmove or Zoopla.
Online auction sites offer a new way to buy a home
Property auctions have been around for years and the benefits are well documented - auctions often result in a quick and easy sale for both buyer and seller. And now one of the major downsides of in-person auctions - buyers needing to be physically present - has been mitigated by proptech companies such as AuctionHouse and Offr.
AuctionHouse provides a space for online auctions with electronic bidding, allowing buyers to take part without needing to travel. Offr enables individual sellers and estate agents to host online auctions on their own websites. By embedding the Offr button on their site, agents can manage the end-to-end auction process from notifying bidders to electronic bidding, deposit payment and digital contract signing. Using AuctionHouse and Offr, buyers can bid and purchase property remotely.
It’s no surprise that online auctions have soared in popularity during the Covid-19 pandemic, with 2021 seeing 40% more property by value sold at auction, compared to 2019. The temporary stamp duty holiday in the UK, combined with travel restrictions, left buyers wanting to make property offers, but unable to leave the house. Many buyers became curious about online auctions for the first time and were able to participate without having to physically show up at an auction site.
Step 2: Comparing mortgage deals
Proptech companies are also disrupting the £1.5 trillion UK mortgage market, with companies such as Trussle and Habito helping buyers to find mortgage products to meet their needs. Gone are the days of manually checking all the available mortgage options with each lender separately. Trussle uses proprietary automation technology to monitor and compare thousands of mortgage products from more than 90 lenders, matching the offers with the customer’s specific criteria. The service then alerts the buyer when the best deal has been found. There are no broker fees to pay, so the buyer saves money as well as time contacting each lender separately.
Habito offers a similar notification service, as well as a range of options to support buyers such as a package that takes care of every element of the lending process, including the legal work. Habito has even created their own mortgage product - ‘Habito One’.
Step 3: Carrying out home repairs
Newly built properties homes may not require any further work, but buyers of second-hand properties, especially those purchased by landlords for the rental market may need renovation work to be carried out. Traditionally, landlords found contractors through local advertisements, or word of mouth, but with multiple properties, logging issues, getting quotes and arranging for work to be carried out by a trusted tradesperson, while also complying with regulations, can be more complicated. This can involve a lot of liaison between home owners, contractors, tradespeople and tenants.
Proptech platforms, such as Fixflo, Rated People and Plentific have been developed to make the management of repairs and maintenance simpler. Solutions such as these allow landlords to browse vetted traders, filtering by location and skill. Users can read reviews and request a quote in seconds, before going ahead with a booking.
The growth of proptech companies continues to accelerate
Real estate professionals have historically held the monopoly on the buying process and there’s still plenty of demand for these professionals to engage directly with buyers and sellers. However, the evolution of the proptech industry has been fast-tracked due to a number of factors. In the first instance, there was a 360% increase in proptech investment between 2020 and 2021. The Covid-19 also pandemic caused the UK housing market to boom, with the fastest growth in house prices in 15 years. And buyers are driving change by searching for solutions that simplify a confusing system, remove points of friction and allow save time and money. As explained in this article, property technology has the power to do just that, along the way changing the shape of the real estate industry forever.
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