Jack-Ma, the legendary founder of Alibaba, once made a controversial statement when he said “the worst people to serve are the poor people”. He reasoned it around how poor customers are always complaining, which contributes to them being poor. One may or may not agree with that, but I believe the market at large does. Poor people may not find their needs serviced but rich people almost always do. It makes sense – they have the money and the inclination to spend it – makes for a good customer.
Which is precisely why it surprises me when the government of India census of 2011 states that 11 million urban houses are vacant. Why would home owners (millionaire by inference) let a high value asset like a house stay idle and not rent it for additional income?
In my view there are two major reasons for home owner reluctance to let their properties enter the rental market:
- Lack of good tenancy laws
- Lack of quick and reliable ways of getting the house rented
The first problem is in the realm of the government. Home owners worry about squatting – and hence would rather not put their property on rent at all. India has a low rental yield of approx. 2%, an unfriendly law only makes it more unattractive. The government has set itself a target of additional 18 million urban houses till 2022, as part of the PMAY Housing for All. A good part of that target can be achieved by fixing tenancy laws that will incentivize existing home owners to put their property on rent.
As for a quick & reliable renting solution – technology can play a major role on that front. Home renting is largely driven by unorganized sector of small offline brokers. There is no dearth of brokers seeking to serve these home owners. However, brokers still follow an age-old process which is time consuming and unreliable and hence, do not foster the kind of confidence that many home owners seek. Technology can change this. There are 100s of people looking for rental houses at any point of time. Why can’t the information on available houses be relayed to them using technology? Customers can check these properties – online & offline – themselves in a convenient manner. This can remove the artificial friction being induced in the system due to faulty business models based on information hoarding.
At FastFox we have significantly simplified the process of home rentals for home owners (and seekers). Today, with the help of technology we are able to significantly increase the number of tenant-homeowner interactions by reducing friction in the system. Available properties’ information is relayed to 1000s of home seekers along with time for visit. Customers are able to visit multiple properties themself and decide. This allows for the whole process of renting to finish in a few hours, what would otherwise take days (or weeks). A simplified process of renting has turned out to be a major advantage for home owners esp. those living outstation.
Home owners are generally rich and are ready to pay for service. What they seek is reliability and that shall unlock value which is in interest of everyone – home owners, tenants & the government.
Author: Pallav Pandey
Passionate about building tech-enabled businesses in emerging markets. Excited to work with young companies in their journey from 0 to 1.