It started around 2007 when an Indian who was working in the U.S. decided to come back to India to start an online portal for house hunting- Sulekha.com. Sulekha is the first well-known startup that understood the pain of renters in the housing space that badly needed more transparency and information flow. Thanks to Sulekha and other internet startups like magicbricks, 99acres, housing and many more, online house hunting has come a long way in the last decade. Innovation and technology backed by millions of dollars have enhanced the landscape of house hunting. However, these startups are yet to find a viable solution to the dilemma which hurts the tenants most- how to bypass local brokers.
Brokers have traditionally controlled this business with their strong local presence and networking with house owners. In principle, there is nothing wrong with anyone being the mediator or a service provider. Brokers are supposed to be the single point of contact for any tenancy related issues during the tenure, but that is a rarity in the Indian renting ecosystem. They have deliberately kept their services limited to arranging the first meeting between tenants and landlords and finalising the tenancy agreement. In return, they demand a recurring yearly payment of amount ranging from 15-30 day’s rent. So much to pay for just to discover properties that are up for letting. Properties listing startups did try to solve this problem by offering online listing and making them accessible to everyone. But it did not help much because brokers sensed this intimidation to their business and adopted technology and the internet. They ‘hijacked’ most of these portals by registering and spam posting stale properties just to connect with the prospective tenants looking out for properties. As a result, the utility of these property portals is now limited to getting the contact details of the local brokers.
Flat and Flatmates
With the evolution of co-living, renters tried to find a new solution to avoid brokers and moved to Facebook groups popularly known as Flat and Flatmates. These groups are like a community of tenants which would help each other by posting their requirement. The moderators of such groups would ensure that there aren’t spammy posts and also ensure no brokers enter these groups. It turned out to be very effective for a few years. But moderators of most of these groups have started to monetize these groups and brokers along with local businesses have taken the advertising spaces. Posting a requirement on such groups invariably fetches responses from multiple brokers. The broking agencies haven’t stopped at penetrating these groups, but many such groups are owned by them. These groups are increasingly being used for local business promotions and just like property portals, their original utility is also fading every day. Brokers have also realized the potential of renters communities and some of them have launched websites that cater to this segment. They have also hired digital marketing agencies to promote their websites and attract renters.
Brokers have certainly taken their game to the next level to survive against internet startups. And time is running out for the existing set of startups to move on to the next level because they have been stuck to property listings for far too long. Startups like- Nobroker are trying to take brokers head-on by using advanced algorithms to filter them out and prevent them from infiltrating the platform. However, it remains to be seen how much they can penetrate the supply side of rental housing which is a stronghold of brokers. Nobroker’s CEO, in a recent interview, clarified that they don’t have any person on the ground. It’s a disadvantage because it restricts their access to the supply side even though it can successfully attract buyers and renters.
It would be exciting to watch this race in the coming years as this sector is bound to see more innovation in the products and services offerings. The government has also shown intent to ease out renting and letting by proposing a new model tenancy law. However, tenants would benefit only if the cost of house hunting rationalizes and the services improve.