Two weeks ago we launched Fronted. To bring you up to speed...
We’ve been building a rental deposit product, made for renters.
A few weeks ago, we got authorised by the FCA. We put the final touches on the product, and... we launched! making our first Fronted Deposit that day. It is quite humbling to see people coming to us with the dream of moving and knowing that we have, in some way, helped them to take that step into a new home.
Launching is a great milestone, but it just means that we have arrived at The Big Game. Now it is time to stretch off and start playing. As hard as it is to plan or have a fixed roadmap at this stage - in reality, we will just be responding to whatever our customers tell us they want - I’m excited to share what you can expect from the team behind Fronted.
What’s possible today?
For renters still looking for a property… renters can get approved for a rent deposit from us up to 30 days before they need to pay their deposit - plenty of time to shop around and find their dream place, not just one ‘that will do’.
For renters who have found a place… they could get a Fronted Deposit paid to their estate agent within 24hours.
Instead of paying a deposit upfront, renters split the deposit over 12 months. 12.5% fixed interest with no early repayment fees (very cost-effective if you are bridging between deposits!)* After the Fronted Deposit has been paid off, the money in the Deposit Protection Scheme belongs to the renter. It’s theirs to keep.
There are three parts that I think we will focus on in the near future:
Longer approval and easier deposit terms
While we’ve made the experience slick for people who know their new property’s deposit amount, we want to make the experience better for renters who are still in the midst of their property search. These renters are coming to Fronted to see how much they can be approved for, and using this ‘deposit in principle’ in their property search. Here are two insights.
- Renters need some flexibility, so they don’t need to reapply again and again. Re-versioning the rent deposit loan so that prospective borrowers can be approved for a max budget and can easily lower the amount means renters don’t feel tied to a certain amount and can focus on finding their ‘right’ place.
- Currently, 49% of people are coming to us more than 30 days before they need to move. We expect that deposits will be paid up to one month in advance - but we’re investigating extending our approval period to 45 days (up from 30) to give property hunters more breathing room.
Working with the ecosystem and partners better
The other part of the journey is sending the deposit money. It’s a crucial step in the journey so it needs to be simple and secure. We don’t send money to tenants’ bank accounts, we send it directly to the agent which means there is an unusual step where we collect the details of the agent. But some renters rent directly from landlords - and right now, some of our approved customers are turning down viewings because we don’t work with landlords. Two highlights are:
- The property industry is relatively well centralised: 3 deposit schemes; 4 big rental platforms; a handful of technology companies. Right now we don’t work directly with them, but in the future, we will.
- As the payer of the deposit, we are given rights on the money under the UK Housing Act and are listed as a ‘Relevant Party’ on the certificate of protection - in theory. In practice, we will see.
Faster deposit decisions
Currently, it takes us a long time to underwrite our deposits. Mainly because we are still in the learning phase of our business. I’m happy that we are taking the time to learn about the customers coming to Fronted, but eventually, we will have to speed up the process. We can handle about twenty applications per day at the moment but we want to be able to manage 1000 per day. That presents a serious(ly cool) challenge.
- Fronted uses transaction data to assess deposit eligibility, we will start to automate this which will speed up application decisions.
- We will explore using data from within the renting and property ecosystem to inform our decisions and speed up our decisions. Partnering with different data sources and reconciling them against applicants will also increase our decision accuracy.
I could write pages of what we’ve learnt...
...but it’s time for me to go back to customer service.
I always want to know what you think of our product and our approach. Talk to me on the community page or tweet me.
*Representative example: Amount of credit: £1,100. Term: 12 months. Repayments: 11 monthly payments of £97.26 and one final payment of £97.24. Total amount payable: £1,176.10. Representative APR 12.50%. No fees.