New start-up InsureStreet aims to transform the rental market by introducing a “rent passport” which replaces deposits with an insurance policy based on previous rental history.
If it works, the app-based “passport” could pump nearly £4 billion of dead money back into the UK economy by substituting cash deposits with trust-based deposit replacement insurance.
The app, which is backed by insurance provider HISCOX and credit rating firm Experian, presents “generation rent” with an easy and affordable alternative to the often crippling upfront cash deposits required by landlords.
The dynamics of the InsureStreet proposition are:
- Typically, renters are charged a minimum of six weeks’ rent as a security deposit, plus agency fees and a month’s rent in advance.
- InsureStreet provides renters with a digital RentPassport™ that validates their profile and then provides renters with an instant insurance quote to cover their deposit.
- Instead of paying a traditional cash deposit, renters make a one-off payment for an insurance policy that covers them for the duration of the rental contract. In most cases, the one-off payment is less than a tenth of what you would pay for a traditional cash deposit.
- The platform rewards good behaviour through lower policy premiums at renewal.
- For landlords, the fear of unknown renters forces them to take cash deposits to cover any losses. InsureStreet replaces that fear with a trusted renter profile and an insurance policy, backed by HISCOX.
- InsureStreet has also partnered exclusively with Experian to offer renters the option to choose to pay their rent on the app and help improve their credit score.
InsureStreet comes at a time when rent rises across the UK have far outpaced wage increases over the past five years – and at a time when more misery is predicted for renters with further steep rises expected over the next few years, particularly in London. However, with a shortage of affordable housing, more and more people have no choice but to rent.
With nearly two out of five UK households renting their home and home ownership at its lowest level for a quarter of a century, this new data-driven approach also has the potential to channel £4bn of dead capital back into the UK economy, as well as free up often badly needed cash for renters. According to the latest figures around the Tenancy Deposit Scheme, right now more than £4bn is tied up in rental deposits schemes, and £1.25bn of that is in London alone.
Tahir Farooqui, founder and CEO of InsureStreet, says: “Our goal is to make it easier for good tenants to find nice places to live – especially in large cities where rent is inflated beyond their means.
“And for landlords, because they have access to trusted renter profiles, it takes away the fear and mistrust out of rental transactions,” he adds. “What we are offering is not only a convenient app to set up and access our RentPassport™ service, but also a ‘Rental Hub’ to connect tenants, landlords and agents with each other and relevant services to improve their overall rental experience. The hub is both intuitive and transparent, ensuring open communication channels, so together the industry can evolve products and services that make a positive difference in the communities it serves.”
The London-based start-up, which is regulated by the FCA, is selectively piloting with trusted and reputable insurance partners including HISCOX, Experian, Urban Spaces, Get Living, Quintain (Tipi), Essential Living, Atlas Residential, Walten & Allen and Fifty Thousand Homes.
Jonathan Westley, managing director of consumer information services at Experian, says: “We believe the new proposition from InsureStreet doesn’t just make renting more affordable, but that it can give people access to more attractive and affordable credit products in general.
“In the past, building a good credit rating has been easier for homeowners than for tenants, because mortgage payments are factored in, but via Rental Exchange we want to help level the playing field for renting tenants.”