Leadhome’s entrance into rental market not so ‘disruptive’

Leadhome’s entrance into rental market not so ‘disruptive’

MAIN IMAGE: Marcél du Toit, CEO of Leadhome; Paul Stevens, CEO of Just Property.

The announcement by hi-tech real estate disrupter Leadhome that it’s entering the rental market was to be expected in these tough economic times says property leader.

The hybrid agency issued a statement this week announcing the experimental launch of a rental service at zero commission in the Johannesburg area. According to the CEO and co-founder, Marcél du Toit, the launch of this new service is part of a broader strategy to provide a full end-to-end range of boutique property services.

The announcement follows only months after Leadhome quietly dropped their set-fee model for a more agent-centred model. According to Du Toit they have done extensive research into the rental market and found there is “an oversupply of stock and undersupply of good quality tenants and a clear need for a disruptive rental proposition”.

The indications are that this is a good time to enter the rental market. Due to financial constraints more people are opting rent rather than buy according to a recent property report by FNB.  Payprop’s Rental Index for 2019 also indicated there’s reason to be cautiously optimistic for a recovery of the rental market due to the first year-on-year rental growth rate seen in two years.

According to Rupert Finnemore, Leadhome’s head of business development, the 0% commission offering is not an introductory offer and includes a full listing, advertising on all major portals, viewing facilitation, lease negotiation, drawing up contracts and facilitating ongoing inspections. He explains that the programme is in an initial test phase and will initially only be limited to Johannesburg North and West. He expects the test phase to run until the new year while they gather more information.

Commenting on the news, Paul Stevens, CEO of Just Property, one of SA’s largest letting companies, says it comes as no surprise that Leadhome has opted to enter the rental market by leveraging the pain point that the property industry is under pressure.

Stevens reckons Leadhome will later introduce fees once they have gained a share of the rental market. According to him they are following a tried-and-tested model of gaining market share by making an initial, no-fee offering – “look at the traction gained by software brands like WhatsApp, Google and Epic Games (of Fortnite fame). As they gain market share, we expect them to introduce fees and/or paid-for services or to make their money elsewhere e.g. in the data that they collect along the way,” says Stevens.

“Theirs is a business model said to leverage the respective strengths of people and technology. This is what our clients are demanding and what all the big real estate brands are focussed on now. Leadhome’s expanded business model is not in itself disruptive or even new. Traditionally sales-focussed real estate brands have all done the same in recent years with a depressed sales market – their survival depends on it. Leadhome is simply following suit.

“Leadhome’s entry may make the market more competitive. We welcome that; it will serve South Africans better in the long run as real estate brands will have to continue to raise their “game” to stay relevant and customer-centric,” ends Stevens.

Showing 4 comments
  • Terence Hogben
    Reply

    I don’t think “they” know anything about renting out homes if they did its not something they would dip their toes in at 0 % Comm 🙂 Lets not mention or share their name because they thrive on Estate Agencies complaining about “them”

  • Bruce Swain
    Reply

    Paul, I agree with you 100%. No rental business can survive trying to offer quality service for no charge. Perhaps Leadhome have a misunderstanding of the demands of the rental process.. Landlords and tenants beware, and do your homework.

  • Johan Meyer
    Reply

    I think it is going to be one of those where the landlord gets their minimum rental number, and whatever they can achieve above that will be the agents share? There is already an agency doing just that. Will be interesting to see how long the zero brokerage option lasts. We could easily offer the same system for a limited period to gain traction as we already have a rental book that covers all our costs. There are also owners who are wishing to sell and offering a “free” rental service to acquire the mandate for a later sale is also an option. Going to be fun watching this one. The problem with an IT only service is a bit like cyberdating. At some stage you have to kiss the bride!!

  • leon jackson
    Reply

    No fee for rental placements? absurd.

    Is the property industry not already flat footed? no growth estimated over the next 3 years +, considering the poor and struggling economy we are currently facing.

    The qualified criteria for rental properties are declining rapidly due to ill affordability, prospective tenants are barely making ends meet.

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