Episode Transcript
[00:00:00] Speaker A: Foreign.
[00:00:10] Speaker B: Let'S Talk Lets, an original podcast from the Lettings Hub. Hello and welcome to the latest episode of our podcast, let's Talk Let. I'm Heidi, the CEO of the Lettings Hub, the tenant referencing business that got good at tech. Let's Talk Lets is our regular roundup of news and views on a whole range of subjects spanning the private rented sector. In this session today, I'm delighted to be joined by Laura Godoin, who is a senior partnership development team lead for the deposit replacement service Reposit. Reposit describes itself as a smart alternative to cash deposits and I have to agree as the service is one of the very useful integrations we have within Box, which is something I'm sure we'll get onto later in the pod. Laura is a former hubster, having worked with us both in the Lettings Hub and UK tenant data and and having worked in the sector for more than a decade, I'm thrilled that she is joining us today. Welcome Laura. It's like seeing an old friend. So please introduce yourself to our listeners and then we'll get talking a little bit about Reposit.
[00:01:13] Speaker A: Thank you Heidi, and thank you for inviting me. Like I said when we were off air, I have not done a podcast before and I'm thrilled that the Lettings Hub is taking my podcast virginity. So thank you very much for having me. In terms of me personally, I look after everything to do with customers at Deposit. So from the moment they join our business and they're onboarded and they're taken through that flow right the way through to the ongoing account management and growth of the business. So we are focused on everything agents are doing to drive revenue, special focus on renters rights and some planning that we're putting into place for agents at the moment. And that's everything really our team does. It's lift up the business and it falls out and that's what comes to our team.
[00:01:53] Speaker B: Excellent. Lovely. So not all of our listeners are going to know what Reposit is all about. So first of all, for any of our listeners who are unaware of the details, it's a service for tenants who would rather not have their cash either tied up in a deposit or perhaps a tenant struggle to find the upfront deposit as well as the rent payment that they needed to pay in advance and the moving costs, etc. Etc. Or they would just rather go on holiday or furnish the property or do a whole load of things. Tell our listeners a little bit more how the service benefits both tenants and the landlord.
[00:02:26] Speaker A: Yeah, of Course. So we position the product as almost like a three tiered benefit system. So there's benefits for agents, for tenants and for landlords. So from a tenant perspective, like you said, you know, tenants can avoid tying up their cash for lengthy periods of time. There's a common misconception that a deposit is fairer for a tenant or more cost effective. When actually if we look at the high interest accounts that the government schemes are placing these deposits in, it's tenants that lose out over time, especially with inflation. The deposit is depreciating as time goes on. And like you mentioned, there are statistics that say 38% of tenants that didn't have the money, so they're borrowing to pay that initial sum of a cash deposit, which makes the tenant very financially vulnerable in the beginning of their tenancy, which is not where we want them to be in terms of benefits to agents, we offer a commission incentive for every single deposit that is sold. And also it's twice as fast to administer the cash, especially with integrations with reference and partners like yourselves and the box system, it's very, very easy for an agent to administer reposit versus cash because cash is time consuming and there's nothing but penalties if you don't do it right. In terms of landlords, it's eight weeks worth of protection, so that's 60% more protection than the capped five week deposit in most tenancies. In terms of the ongoing protection that they have, we give a financial guarantee because we're FCA regulated and we're FSCS protection protected. So there's no concerns whatsoever from a landlord's point of view. We still hold the tenant responsible for any end of tenancy charges, but we do have an insurance policy that sits behind the scenes should the tenant not make those payments. Wow.
[00:04:01] Speaker B: And reposit's been around for quite a while, hasn't it? Did it kind of get born out of the Tenant Fees act or how did it come about in the first place?
[00:04:09] Speaker A: So actually it was way before then. So I'd say the spotlight on deposit alternatives did come from the Tenant Fees act, but our business, which originated before that, it actually originated from our previous co founders actually moving to London. They were relocating and the significant sum of money was eye watering as you can imagine. And that's where it originated from. And we grew and developed the business and like I said, the spotlight was really shone on businesses like deposit during this kind of fees that because agents were looking at different solutions to generate revenue to streamline administration. And that's where we really came centre stage with that.
[00:04:47] Speaker B: Okay. And my understanding is obviously then reposit has, I guess changed and advanced over time. Where if there is a tenant who wants to release some capital during a tenancy or there's a life event that's happened and therefore they need access to cash or whatever else, reposit can also kind of come to the rescue.
[00:05:05] Speaker A: Yeah, absolutely. So we allow tenants to choose deposit both at the beginning of the tenancy or during the tenancy, they can decide to switch out their cash deposit or reposit. The agent will benefit financially. In both of those circumstances, we actually pay more commission for an existing tenancy switchover. It's less risk to us. As far as we're concerned. We've got an existing tenant, they're paying their rent, they seem great. But from a tenant's perspective, especially now more than ever, we're in January. Everyone feels like they're waiting forever in a day for the next payday. Some people took it early. It's perfect opportunities to offer your tenant and deposit back.
[00:05:38] Speaker B: Yeah, okay. And how have you seen kind of the demand change over time? Like is it still a case of tenants, you know, you'd love more tenants to know that the product existed because you feel that so many more people could benefit from it, or is it kind of a growing trend already? And then I suppose my follow on question is if someone's had a reposit once, do they kind of repeat then and they come back, you know, when they go into their next tenancy, you know, that's their preferred option.
[00:06:05] Speaker A: Again, to be honest, our route to market, although the primary benefits seem like they're tenant led, our route to market is letting agents, as you know, you know, letting agents are in control of that sales cycle with reposit. But in terms of tenants, whenever we present the choice to them, 60% of tenants choose reposit regardless of whether they've heard about it or not. Once they learn about the alternative, typically they will then lead, you know, towards reposit. In terms of agents understanding more about the product, it's much, much easier for us to have our new business sales conversations because agents have heard about these types of products. Additionally, you know, it was about 18 months ago the House of Rank guide was updated and the government now made reference to deposit alternatives. So it's becoming more and more known in our industry and that makes our lives even easier. So for us, you know, the conversations with new agents is easier. The conversation with existing agents is more engaged, they understand the product more and they understand the demand for it.
[00:07:02] Speaker B: Yeah. And I guess, you know, we've got a flaw in the industry, haven't we, that a tenant's deposit is held up from one property before then. Before. And they don't get that back before they obviously ready to move in to the next. And so do you kind of offer short term loans, I guess to tenants or is it kind of that they're entering into that for a period, a longer period of time for the whole tenancy?
[00:07:24] Speaker A: Yeah. So the tenant will have a reposit for the duration of the tenancy. When I say the tenant has, it's the landlord who's the beneficiary of our protection. But it will be the life cycle of the tenancy.
[00:07:34] Speaker B: So.
[00:07:34] Speaker A: So you're right, Heidi. Tenants do recycle their deposits, but often what you find is they're bridging that gap with overdrafts, credit cards, bank of loan and dad.
[00:07:41] Speaker B: Yeah. And you know, just from I guess your knowledge of the business, what are the main reasons tenants choose it? Because I guess one of the fear factors, and I know when we talk about it, we have our own deposit replacement scheme, but obviously we have reposit as well and I'm a big fan of it as an option for a tenant to give a tenant choice is the fear from some clients is oh, it's only for tenants that can't afford it. And I don't really want those tenants actually in my property. I want to know, and I want, you know, security that that money is, is locked away.
What are the main types of tenant that actually really do buy it?
[00:08:18] Speaker A: In reality it's the exact same tenants that you went to and you reference to because you know, you're absolutely right, we don't want those tenants either. You know, our business wouldn't be a sustainable business model if all we ever took was point quality tenants. And from our perspective, tenants need to undergo referencing with a third party and they need to pass referencing or they need a guarantor or rent in advance. I know when thinking, thinking forward long term it will just be guarantor. But in terms of how we onboard agents, we explain to agents, you know, you are not now trying to source a different demographic of tenant. You are still considering the same tenants you've always considered. You're now giving them a second choice. And actually when you present a second choice to those tenants, 60% of them will choose to rent without a cash deposit. But it's just previously they weren't being asked that question. So no tenant in this current climate is going to come forward and say, please, can I rent from you, but I can't afford a cash deposit because they can't afford to divulge that information at risk of not getting the property.
[00:09:14] Speaker B: Yeah, and definitely from my experience, you've got tenants that just want to make the property better. You know, they want to make it a home rather than, you know, a house. They want to stay for a long time. If they've managed to fight all the other tenants off to get in there, then, you know, they want to stay for a long time. It's not that they necessarily want to house hop. So it's often to buy a sofa, isn't it? Or you know, the things that actually just make that whole moving process, you know, particularly enjoyable for the tenant. And it's an option that not everybody is, you know, not, not every tenant understands is available until it's presented to them and then they feel that they can sit and make a choice.
[00:09:50] Speaker A: Yeah, 100%. And you know, like I said, the end of tenancy piece is very, very similar. You know, we see that about 40% of our tenancies end with, you know, clean and damaged item removal or rental arrears, which is comparable with house. So there's no direct link, just going back to that point about, you know, poor quality tenants. There's no direct link to the tenants that are taking deposit, actually damaging the properties more frequently or ending tenancy to apply arrears. Because like we said, all of those tenants have been vetted by our referencing partners.
[00:10:20] Speaker B: Yeah, absolutely. And you work with a whole range of providers across the market, is that right? Like, how does, how does that work for you? How do agents get to know about you? Is it best for them to come direct? What would you recommend?
[00:10:36] Speaker A: From our perspective, we would always encourage any agent of ours to utilize deposit via a reference and integration. And we say that for a couple of reasons. From a tenant's perspective, it's easier to have one communication point. It's confusing getting bombarded lots of emails from companies you potentially never heard of before. So it's a consistent message, it's one voice, it's coming from one system. Additionally, from an agent's perspective, we want to reduce admin as much as possible. If you make the process too complicated or too complex or too time consuming, it's not going to be done in reality. And we know that the conversion rate through referencing integrations is much, much higher than relying on a negotiator, having that sales conversation face to face. Lots of tenants prefer to buy online, you know, make their own informed decision once they can do a little bit of research. So our, our encouragement is always for agents to come to us by referencing partners. And if they're not currently with a referencing partner that we integrate with, we would always let them know who we integrate with and we'd encourage them to take a reference and service with somebody that we integrate with. And you know, just touching on the integration that we have with Box, you know, we have a very unique integration and it was one of the most recent ones that we did. Not being biased because I was heavily involved in it on TLH's side when we did it. But the aesthetics are brilliant. It converts really, really well. From an agent's perspective, they can default that offer to a tenant consistently, so the team don't have to remember to offer it from a tenant's perspective. They stay within that box journey, they don't leave the platform. You know, they see all of the information that they need, they're redirected to our page seamlessly through throughout that journey. They pay, they sign onto the seats and they're right back in the system ready to sign that tenancy agreement. So it's a brilliant journey. Yeah.
[00:12:13] Speaker B: And I, I mean, if I was a tenant, I mean. Well, from a reposit point of view, we know that when a tenant leaves TLH box and goes into reposit that they're already pre vetted, we know that they're allowed one, that's why they've been offered the service. And so it's very quick and there's no kind of, okay, let's just check that you meet the criteria. It's near enough for a slam dunk. Here we go.
But you're right, you know, from a tenant's point of view, whether, whether it's through Box or whether it's through another referencing company, making, you know, the tenant's journey much easier has got to be best for them because although we navigate lots of legislation and things, we often talk a very alien language, I think in the industry to somebody kind of going through the process, especially if they're going through for the first time.
So legislation, massive change this year. We all have no idea really when. And actually the what seems to change a little bit as well. And we've actually just recorded a podcast last week with Hannah, who is a Welsh agent, and she talked to us all about the legislation in Wales and how that's going to differ to England. And the one bit of advice she did give is don't panic early because lots changed for them and even at the very last minute in Wales, fixed term tenancies were, were brought back. But how does the renters rights affect reposit? Is there going to have to be changes to the product or is, you know, is it too early, you still waiting to, to find out?
Is it still going to be around? Is it permitted, is it allowed? Is there more reason than ever that an agent should kind of sign up now? Especially because they're going to have to go through, all of us are going to have to go through, through so much more change when the new legislation lands later in the year.
[00:13:56] Speaker A: So in its current format, I mean, like you said, it's ever changing when we, when we get new readings. In its current format, there's nothing material that we need to change about our product. We are fully compliant with what the Renters rights Bill is proposing to look like from an agent's perspective. Yes, I'd probably say there is more emphasis on using third party services that generate revenue and reduce admin like ourselves. Additionally, you know, there are going to be, or it's looking likely that we're going to be removing the upfront payment, so the rent in advance piece. So freeing up as much cash as possible in the beginning. For a tenant who is potentially coming from overseas, doesn't have a guarantor, freeing up that initial deposit amount gives them more flexibility to use third party guarantor services potentially. So potentially there's a solution there. Like we said, you know, there's going to be a huge loss of revenue for agents that are charging for renewals.
Additionally, I think there'll be more emphasis on things like section 13 notices and I think offering tenants a deposit release when you're increasing their rent I think is, you know, a nice way to soften the blow because agents are going to be doing rent reviews more frequently because it's directly linked to the management fee for receiving. Landlords are going to want to get as much, much money as possible. But we also don't want tenants to be penalized financially. Otherwise it's one big vicious circle. So we could potentially offer a deposit release back to those tenants.
[00:15:15] Speaker B: So I guess a deposit release can only be authorised if the tenant is not in arrears.
[00:15:20] Speaker A: Exactly that. So we don't insist on fresh referencing, you know, fresh inventories or anything like that. All we ask is that the tenant has not been in arrears for over 14 days in the last six months and that the rent has not been increased more than 10%. Year on year. And we can use all of the original documentation. Just need landlord and tenant consent to do it.
[00:15:38] Speaker B: Okay, fine. So if a tenant, you know, potentially is starting to go, oh, you know, my rent's going up, you know, let's say it's 5% even my rent's going up 5%, you know, that's going to be another 50,000. 50,000 50 pounds a month for me.
You know, that's kind of just putting me, you know, to a place where I don't want to be. This is potentially a really good option, isn't it? Because if they get their deposit back of one and a half thousand pounds, there's a lot of fifty pounds in there of where it can help them over a much longer period of time throughout that tenancy. Do you see people using it like that near enough to help that deposit amount return prop up? You know, I guess their income maybe over, over a period of time, if it becomes tight, that's where we see.
[00:16:23] Speaker A: It as being useful because there really is a good opportunity for the tenant to almost pay that back onto their rent account.
[00:16:29] Speaker B: So.
[00:16:29] Speaker A: So like in the example you just used, you know, the rent's gone up 50 quid from 500 as an example. Okay, well, let's keep my 600 pound cash deposit on account. I'm going to carry on paying you £500amonth for the next year. And they haven't really felt the impact of that rent increase at all. Now we're talking about tenants. Whether they do or whether they do that or whether they don't is, you know, completely depends on how financially savvy they are and, you know, how much they're thinking forward. But that's definitely how we would be positioning it. Also, we know that summer is a really expensive time of year. You know, the children are off school and it becomes a little bit more expensive and, you know, with childcare and things like that. We know that Christmas and New Year is an expensive time of year. So we typically find that there are particular hotspots throughout the year where switches is very exciting for tenants. And then there's some months where it falls a little bit flat because they don't need it.
[00:17:19] Speaker B: Okay, fine, just talk us through how it works at the end of a tenancy.
[00:17:24] Speaker A: So at the end of tenancy it would work how you'd expect a cash deposit to work. So agent will review the property, review the checkout report, determine how much the tenant owes. Unlike cash, where you have a pot of money that you're going to deduct from they would actually present the charges to the tenants. Tenant has an opportunity to negotiate with those charges. They can review and accept them if they're happy with them, or they can continue to negotiate right the way through to the point if they want to take it to an independent adjudicator. Our adjudication process is the fastest in the market, so faster than any deposit alternative and also faster than any cash deposit scheme turned around within 14 days. At the end of that point, if the tenant still hasn't made their payment, then that's where our insurers would step in. We will continue to chase the tenant whether or not we've paid out. So the tenant will always remain liable for those charges. But the landlord has had their claim cut closed successfully.
[00:18:17] Speaker B: So if I'm kind of just kind of paraphrase some of the things that you've kind of said throughout the pod, I suppose the question is, is for a landlord or an agent? Why don't, you know, why would not this be the preferred choice for, for everybody? Because I guess it removes conflict management between the agent, the landlord and the tenant. Because really it gets passed to you if there then is genuinely a dispute, you know, you've got to settle the claim and then deal with the tenant after, afterwards, if that, if there's anything to deal with. The landlord has got more protection. So instead of getting five weeks payment, they're getting up to eight. Landlord is quicker to get resolution on their claim, so any money that's owed to them, much faster. If that's all true, then why, why does an agent or a landlord not like it? Is it just because they're not educated enough about it and therefore they don't understand how it works? Or is there any kind of unintended consequences, I guess, of signing into the scheme?
[00:19:16] Speaker A: A little bit of both, to be honest. So there's no consequences whatsoever to answer that question really directly. But there are some misconceptions, I think. Firstly, it's the fear that it seems too good to be true. So, you know, all the things that you just listed right there, it's completely free service for landlords. They get 60% more protection than cash. They're going to get it faster. What's the catch? When do we ever say that to laws? Never. So I think that they're a little bit nervous about that. And like we said, there's common misconceptions like you've been mentioning throughout the pod is, you know, is the tenant more likely to damage property? You know, are we now going to get a tenant who can't pay their rent. And I think it's those common associations. The biggest problem we actually have when we talk to new agents is either they're uneducated, so they've never heard of it at all, and once we educate them, they're more than happy to use this type of service, or it's that they've used a different type of service and they've been stung. And I think that's probably the hardest agent to convert because once fit into a child with any product, you probably find the same idea with things like some of these had a bad experience with another provider. They are the kind of the hardest, the hardest agents to convince otherwise.
[00:20:26] Speaker B: Absolutely. So I guess it then just comes down to the belief that you're good to your word, you're going to deal with the claim, you're going to pay that claim, rather than the agent just having that deposit where I guess it feels more in their control to get it returned.
[00:20:40] Speaker A: Yeah, and for some people, you know, we pride ourselves on having insurance backing because as far as we're concerned, that gives our products some stability. It also means if anything were to ever happen to reposit, there's a safety net there, there's a protection there. But to some people, insurance is a bit of a dirty word again, you know, in any sense of the term. You know, you could have had a car insurance claim that didn't go well. You could have had a house insurance claim that didn't go well. And for some people, they get nervous with that word insurance. And I think without speaking to us and understanding that we don't operate that type of insurance model, you'll never speak to our insurers, you'll never deal directly with our insurers. We add you to our master insurance policy. So you will only ever deal with us, you'll only ever deal with the people that you're used to speaking to every single day.
[00:21:22] Speaker B: Excellent. Well, I am not a tenant anymore. I was for a long time, but I would definitely consider the product.
Personally, I just like my money in my bank. And you know, from a tenant's point of view, that sounds very old fashioned, doesn't it? But you know, I definitely think it would appeal to tenants like that too. Well, Laura, thank you so much for your time. Hopefully anyone that's interested when we put out the pod, there'll be all of the details there so anyone can get in touch. That's fine. Um, but all of our regular listeners know that we always ask every pod guest if they have a funny story or anecdote for us to finish the pod on a high. What do you have for us today?
[00:22:10] Speaker A: So I was a bit nervous actually when you asked me for this. So the funny story I have, it's not work related because we keep it professional and above board every day between nine to five. So it's a, it's a gym story.
Myself and my friend Laura, we were doing the new year, new me thing. Not this year, this is last year. And we were in a heaving commercial gym, so very, very busy. We were deciding we were going to get a hot bikini body. So we were doing this ab workout together. We were passing a medicine ball to each other. Both kind of sat down facing each other like, you know, doing a crunch and passing a medicine ball. And as I leant forward to pass the medicine ball to her, I immediately felt this huge waft of air. And I looked at her and she looked back at me and she was like, what is wrong? And I scuttled forward and I said, laura, I think my pants have just split. And I opened my legs. She went, oh my God, close your legs quickly. And I was unfortunately wearing a thong and my pants completely given up on me all front, all the way up my back. So we were sat there. I couldn't move. I couldn't move. So Laura had to take her top off. I was like, please give me your top. I had to tie it around the back of me and tuck it into the back of my back of my bands. Like I was wearing it like a flag and had to sprint out of the gym. And I never went back to that gym ever again.
[00:23:35] Speaker B: Never.
[00:23:37] Speaker A: So I don't, I don't have the rocking holiday to do now. And it's, it's my pants fault.
[00:23:41] Speaker B: Yeah, there you go. Hey, but that is the benefit of you must always go to a gym. Go to the gym with your friend. That's kind of the model of the story because imagine if you were there on your own. You know, that's a whole different ending, isn't it, then to that story?
[00:23:55] Speaker A: So I had to have to strip some clothes off my friend and run out.
[00:24:00] Speaker B: Thank you for sharing that with us, Laura, for all of our listeners. To ensure you never miss an episode of let's Talk Let, please follow us on Spotify or wherever you listen to your podcast. Please leave us a review and thank you, Laura, and thank you all for listening. Let's Talk. Let's an original podcast from the Lettings Hub.
