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November 03, 2020

Improving the UK’s rental experience one tenant at a time

Zak Lambert

In recent years, developments in open banking and fintech have enabled consumers to manage their financial lives in new and creative ways. These include simple, convenient solutions designed with users in mind.

Apps like Cleo, which provides personalised budget and spending breakdowns to help users pay the bills and save, or Acorns, which helps users grow their money by investing spare change from everyday purchases, empower consumers to make the most of their money. As innovations like these and more continue to evolve, developers are using financial data in new ways to assist consumers in their daily lives.

Take home rentals in the UK, which account for the living accommodations of a fifth of the country’s population. Historically, tenancy approval depended on a mix of income, credit scores and rental payment history—a process that isn’t always fair or equitable. Young people who’ve yet to build a credit history or prospective tenants who’ve never previously rented are just a few examples of populations likely to encounter roadblocks.

But now, there is a new wave of fintech companies applying open banking technologies to reshape the rental housing market—and Plaid is helping to make that shift possible.  

Based in London, Canopy is a digital rental marketplace that supports renters throughout the rental lifecycle, from leasing and occupying to saving towards a resilient financial future. At its heart is a product called RentPassport, through which a renter enters their application information and instantly connects their payment accounts using Plaid.

From there, Canopy verifies their income and identity, completes the necessary reference checks, and evaluates their creditworthiness using the open banking data Plaid provides. The next time they want to apply for a property rental, they simply connect their RentPassport. The approval decision is often available within seconds or minutes—compared to the hours prospective tenants typically spend filling out forms and providing bank statements to each prospective landlord, and days waiting to receive approval decisions.

Canopy offers related financial products as well, including insurance that replaces the traditional security deposit, reporting of on-time rental payments to improve credit scores, and what they call “Rental Health”, which helps users make better rental decisions through personalised insights and recommendations based on their unique income and spending habits.

On the other end of the spectrum, Scraye focuses on landlords and agents to improve the rental process for prospective tenants. It does so by handling the entire process, from listing to rental to management, should the owner so choose. Landlords can then relax in the knowledge that rent and damage protection is built into every property rental agreement, while agents enjoy cost savings and reduced administration for working within the platform.

In turn, tenants get a modern, user-friendly search with honest profiles, authentic photos and verified 360° tours. Once a prospective tenant has been approved by Scraye based on the identity verification and consumer-permissioned open banking data Plaid supplies, they can instantly rent any property for which they qualify without having to negotiate or await an offer. For this, Scraye looks at a tenant’s assets in lieu of their credit score to more fairly assess their financial health and open up doors that would otherwise remain shut.

Standing orders
It’s not just the application process that’s in need of change, however. Once a tenant is in their new home, missed monthly payments can result in hurt credit scores, extra fees, and lost future references.

That’s where Payment Initiation comes in. Rather than fill out a direct debit mandate, users can quickly and efficiently set up a standing order within the rental platform. These are perfect for repeating payments—like monthly rent—and put control of long-term financial health squarely in the renters’ hands.

To a better rental tomorrow
If you’re looking to change any part of the home rental process—from application through to paying the rent—using financial data, reach out to our team to see how Plaid can help.