In the third article of our “Innovation in Homes” series, Karen Ng, Investment Manager at Big Society Capital, has asked entrepreneurs from The Young Foundation’s Reimagining Rent programme to share their learnings from building ventures to improve the Private Rented Sector (PRS). If you are interested about innovations within PRS, you can also read Karen's previous interview with Nationwide Foundation here.
The Young Foundation launched Reimagining Rent in December 2017 and supported a group of 7 exciting ventures that aim to tackle pressing challenges in the PRS and improve tenants’ experiences. I had the opportunity to interview entrepreneurs from the first cohort and asked for their key learnings from the past 6 months.
1: Focus on your customers
RentProfile is creating a trusted network of verified landlords and renters, where they can set up unique online profiles, perform self-background checks and recommend each other to show good rental history.
Paul Munday, Co-Founder of RentProfile, shares that by focusing on their customers, further opportunities are unlocked:
"Recipients of housing benefit or universal credit often face exclusion in the PRS, regardless of the stability of their circumstances. We realised there is an important opportunity to tackle this through our tenant background checks, providing a more accurate affordability gauge."
A customer-centric approach helps entrepreneurs to develop a clearer market positioning. Community Sponsors Homes is developing a residential impact investment fund that purchases accessible rental properties for wheelchair users, a first of its kind in the UK.
Eleanor Bowden, CEO of Community Sponsor Homes, shares that:
"One key learning we took away was mapping our customer journeys and how we talk to different stakeholders. This improved our relationships, and ultimately increased our efficacy."
2: Fall in love with the problem
Entrepreneurs often pivot their business models in response to new insights. For entrepreneurs who are working to create social change, these insights are gained from deeper understanding of the social problem, rather than the solution or idea itself.
Kineara’s Rent Support Programme works to prevent homelessness by supporting people who are in debt and at risk of eviction. It partners with tenants and landlords to run a 10-week programme that tackles the root causes of rent arrears.
Maria Morgan, Director of Kineara, talks about the benefits of taking a more holistic view of the problems encountered by tenants in the PRS:
"We support people at risk of eviction so have a deep understanding of the underlying issues that can lead to tenancy disputes, but taking part in Reimagining Rent gave us a more focused reason to expand our knowledge of the broader PRS landscape, so we know how to better navigate it."
RentSquare uses technology and open data to improve the efficiency and transparency of housing in the PRS. It has created a calculator that works out the “sweet spot” for rents for every address in the UK.
By focusing on the broader problem of PRS affordability, Helena Trippe, CEO of Rent Square, is able to further improve on their existing solution:
"Our major insight was that the PRS's affordability problems are not only about empty properties driving up rent, but also that renters are penalised by credit tests which have failed to keep up with changing employment patterns. We have since developed a new feature to counter this."
3: Quantify value creation
Having a clear plan to collect the right types of data is often the first step to make better and more data-driven decisions. Not only can this enable businesses with setting key metrics to track social and financial performances (how well is the company performing according to its plan?), it can also help quantify the social value they have created (how well is the company serving its stakeholders?).
Cambridge House’s Safer Renting Project designs and supports pathways out of slum rentals for tenants by providing advocacy and support. It also influences social policy to create better conditions for renters and to drive slum landlords out of business.
Roz Spencer, Project Director of Safer Renting, learnt more about the value created by his project by looking more deeply into data:
"Encouraged by our Young Foundation mentors, we found from delving into our metrics just what a high, and growing percentage of our work is stopping illegal evictions, in addition to the social value of reducing the brutal effects. This shows what amazing value for money our service offers."
4: Consider social investment
Early-stage entrepreneurs often rely on “bootstrapping” or funds from friends and families to develop their businesses. For entrepreneurs who are creating businesses that aim to achieve both financial returns and social impact, understanding more about social investment may bring in mission-aligned capital as well as networks to grow their businesses.
Homeless Rooms matches empty rooms in supported accommodation to homeless people and sofa surfers. Its property search site provides accommodation for those who need somewhere to live whilst at the same time creates cost savings for local authorities.
Lee Blake, Co-Founder of Homeless Rooms, talks about his journey in considering social investment:
"We are more aware of the amount of opportunities there are for an enterprise like ours in social investment, an avenue we hadn’t really considered before. We’re now working on developing our business model and structure into one that will allow us to tap into this market and access the investment we need to grow."
Applications are now open for the second cohort of Reimagining Rent, a pioneering six-month programme from The Young Foundation providing workshops, consultancy and access to expert advisors for initiatives tackling challenges in the private rented sector (PRS). Find out more about the programme and how to apply on their website.
Big Society Capital is actively looking for partners to co-develop investment solutions to provide homes for people in need. If you or your organisation is also working on innovative ways to improve the private rented sector, please get in touch with Karen at: KNg@bigsocietycapital.com