Letting agents and landlords have faced huge change and uncertainty this year, with Covid-19 the major driver. But even before the pandemic, transformation was underway.
New lettings legislation has forced landlords to adapt; a no-deal Brexit hung over our heads; and the extraordinary potential of the PropTech revolution is finally coming into view.
A technology which is transforming the future of PropTech is Open Banking. Two years ago, the Competition and Markets Authority (CMA) ordered the nine largest UK current account providers to open up their data for the new Open Banking initiative.
This regulation has moved financial data from the banks’ ownership, to the hands of consumers. This treasure trove of consumer financial data that used to be the exclusive domain of banks and other non-bank financial institutions, is now accessible to accredited third parties (with explicit and informed consent from the consumer), enabling it to work harder for the consumer.
It is hoped that approved third parties, such as budgeting and savings apps, can ‘plug in’ and access the information, in a secure and standardised way, to help people improve the way they manage their finances and increase financial resilience in the wake of Covid-19.
Canopy has put together a quick reference guide on how landlords and agents can benefit from the game-changing tools powered by Open Banking:
Open Banking returns ownership of financial data to the consumer, allowing them to give third parties like budget and payment apps permission to plug into their online banking accounts using fast and secure API technology. For agents and landlords, Open Banking enables automated payments and real-time payment management as well as a more streamlined referencing process, among other exciting innovations.
Many landlords may be unaware that thanks to Open Banking, tenants can now automatically verify income and past rental payments and share this data. Currently, there are 15 million renters in the UK market who move every 12-18 months and each time they move, they need to secure a new reference. The current referencing system is extremely invasive, stressful and time-consuming for tenants.
Visionary technologies such as Rental Passports, which access Open Banking data, can provide proof of an individual’s rental and credit history and their ability to pay rent promptly, so that you know immediately if a tenant is suitable for a property. They also can reduce the back-office costs historically associated with tenant screenings—a major plus now that tenant fees are a thing of the past.
Open Banking can transform the tenant screening process into a quick, hands-off, and cost-efficient digital task. No more phone calls, faxes, or tedious reference checks required. By working with a digital tenant-screening platform that offers a Rent Passport feature, landlords and agents will never have to ask for, or verify another payslip or bank statement again. Instead, tenants quickly connect the platform to their online bank accounts, granting it access to a host of crucial screening information within a matter of minutes.
Tenant referencing can be eradicated which can also bring huge improvements to the rental application and management process, making it a quicker and smoother experience for letting agents, landlords and tenants. Eliminating tenant referencing costs is a first step towards that goal. Canopy is one such provider in the market which offers free instant, Experian and Open Banking data-based referencing to letting agents and landlords.
The industry needs to come together and build a rental ecosystem that will help millions of renters to achieve better rental and financial health. PropTech and Open Banking are helping to connect the disparate strands of the rental journey, bringing them into a seamless process.
Written by Chris Hutchinson, CFO & Co-Founder of Canopy