Flat Monthly CEO Michael Hogg argues that within the next five years, a significant consumer shift will change the way rental property will be transacted, secured and valued.
By Michael Hogg
COVID-19 has changed the way we live, and work. In a climate where remote working is the status quo and where everything, with the exception of essential services has to go online, industries are forced to fast track their digital capabilities or be left behind.
This has affected the outlook on the residential property landscape in Singapore, with flash data from the Urban Redevelopment Authority (URA) this month, citing a 1.2 per cent drop in the prices of private residential properties in the first three months of the year from the previous quarter. The office rental market will also play a big part, as work from home measures are potentially extended to the 3rd quarter of the year, companies are shrinking their presence in the CBD and relocating to other areas across the country, creating greater development opportunities for mixed-use spaces.
The pandemic has only fast-tracked the inevitable digital migration, aided by the proliferation of industry 4.0, the proficiency and familiarity of the global population interacting and transacting digitally has risen. With the digital tools and infrastructures in place, services that can seamlessly replace the expected physical touchpoints with digital equivalents that are similar or better experiences are the ones that go through the least upheaval and will be capable of thriving during the pandemic, and in a post-COVID-19 world.
URA flash estimates of home prices Q1 2020
What does this mean for the way we approach property rentals? Where traditionally, we see a higher degree of financial commitment and more physical touchpoints, raising the barrier of entry for platforms to create a level playing field that balances the needs of both landlords and tenants. Would a smooth transition to go fully digital be possible?
We have seen the evolution of property transactions online go through progressive adoption. From the likes of Agoda and Booking.com which started with nightly transactions from hotel providers to Airbnb which allowed for bookings that could span months from private homeowners, showing the comfort zone extending to longer stays.
In the next step forward, we could be seeing online rental engagements go from months, to years. Longer time commitments would naturally result in the need for a process requiring more touchpoints. Issues such as rental laws, KYC (know your customer) measures, and clauses for both the tenants and landlords have to be considered.
In light of the pandemic we examine how these touchpoints need to be viewed and adjusted to enable the entire process for long term rental to be completely online. A venture only possible when trust, tech, and transparency come together.
Searching for rental properties online isn’t a new concept, and we are accustomed to browsing through listings on sites. However, in the context of long term rental, landlords and agents need to foster trust and share more information through detailed search parameters that should include:
Availability – a calendar with laid out dates, the time frame for the lease, and whether it is negotiable
Space – share a floor plan, accessibility to parking spaces, where the power outlets are located (socket-outlets for shavers are a lifesaver), ceiling height (important for creative professionals who might fashion a home studio), what direction the apartment faces, how furnished it is and what is included or excluded
Amenities – such as the options and availability for public transport, the distance to the local supermarket and eateries, as well as schools
Restrictions – state them clearly, policies on pets, or any others that come to mind. This allows potential tenants to have a better idea of the property before getting in contact, filtering the quality of queries, and saving time for everyone.
Inspections – Being able to inspect and physically see the space is a crucial touchpoint in the process, and a combination of tech and creativity can successfully migrate the experience digitally. We always see the best photos for a property when it is for sale, but when it is presented for rent, the quality can be horrible – a rental property must be presented well with professional photography.
We can expect 3D, AR, and VR options to cover the space, as well as the neighbourhood and the immediate streetscape of the property to increasingly become the norm. In lieu of physical meetings, live video walkthroughs are essential to bridge the offline to online gap.
In addition to showing accurate real-time portrayals that match what was shown in the listing, live video walkthroughs give the tenant an opportunity to get a sense of the neighbourhood and the immediate streetscape, to further understand the benefits of the property and location.
Live video walkthroughs also serve as a verification process to test appliances, outlets, fixtures, and any other amenities that come with the property. Having a recording and timestamp of the video will be helpful in the case of any discrepancies that could arise.
Documents and payments – Once the tenant is confirmed with the rental property they want, the process of documentation and payments need to be transparent, convenient, and secure.
Digital contracts should be the minimum in addition to digital LOIs. Additional accessibility can be introduced by having flexible payment terms, and payment options that include credit cards, direct debit, and other reputable online payment solutions to cover rent and security deposits.
Ultimately, the pandemic is a perfect time for the property rental industry to take a closer, introspective look into the processes, attitudes, and approaches that have been prevalent. Where before the pandemic, we have seen a predominantly landlord-centric, we believe the paradigm will shift as we look at the utility of space in relation to the way we work and live, with further calibration resulting from the rise of organisations effectively adopting better work from home options. We will see the industry lean towards balancing itself, with a completely digital approach being the driver that levels the playing field, and moves the property rental market in a better direction.