Runaway tenants, tardy payments and damages to properties are some of the nightmare scenarios for landlords. Over the years, Wong Whei Ming (right) has heard many such stories from his friends who rent out their properties.
“In one case, a tenant had delayed paying rent for months and kept showing his payslip as evidence that he would pay up in the coming months to avoid being evicted. But my friend discovered that the payslip had been falsified and that his tenant had been spending a lot of money on entertainment. He evicted the tenant but still lost about six months in rental.
“Another more extreme case I saw was a property that had been vandalised by its tenants. They drew graffiti on the walls and left rubbish inside the house. It was like a landfill and the smell was unbearable. The landlord had to pay heftily to clean it up after he evicted the tenants,” says Wong.
While Wong’s own tenants seem like angels in comparison, some of them had previously been late with their rental payment and did not take good care of his house. Thus, he decided to start Speedrent, a mobile application for home rental that connects landlords directly with their tenants without having to engage an agent.
The app aims to help landlords by providing them with objective data such as the prospective tenants’ credit history as well as results of employment and background checks, with the consent of the tenants. After a tenancy agreement is signed, the platform would collect rent from the tenants and transfer it to the landlords. They would thus be spared the hassle of having to chase the tenants for payments.
As the economy appears to be going through a downturn, rental income makes a significant difference to landlords, says Wong. The app could also serve as an additional avenue for them to advertise their property, allowing them to reach more prospective tenants and have a better chance of securing rental income, he adds.
The CEO of Speedrent says the platform is also trying to resolve the problem of insufficient deposit. The current practice involves landlords taking about three months’ worth of rent as deposit to cover their losses should their tenants run away. However, if the tenants had owed the landlords two months’ rent and there were some damage to the house, the landlords may still be on the losing end.
“At Speedrent, we practise a ‘no deposit’ policy. Through our partnership with Allianz General Insurance Co (M) Bhd, we have replaced deposits with landlord insurance. It will provide up to two months’ rent, a RM15,000 all-risks benefit and a RM1,000 inconvenient benefit to landlords in cases of default or runaway tenants,” Wong explains.
“As we are using objective data to screen tenants, we are able to identify the bad apples. This helps to lower the risk of rental default or runaway tenants.”
According to Wong, the existence of Speedrent is a win-win situation for both landlords and tenants. Landlords would be able to receive rent without hassle while tenants would enjoy steady cash flow as they would not need to put a deposit down, he says.
So, how does the platform work? “At Speedrent, listing properties is free of charge. Landlords can download our app, register themselves, fill in the details and upload some photos of the rental property to create a listing,” Wong explains.
“Once the property is listed online, those who are interested to rent it can send a chat request to the landlord. If the landlord accepts the request, they can start chatting within the app about the details of the property.
“If both parties are in agreement about renting the property, we will obtain permission from the prospective tenant to perform credit, employment and background checks on him or her to make sure that he or she meets certain standards. We will then provide the data to the landlord, who will decide whether to accept the tenant,” says Wong.
Due to privacy concerns, all data presented to landlords will be simplified into grades that indicate how tenants have fared in the checks, he explains. The landlords will not be able to see the tenants’ exact information, such as the details of their credit history.
Wong says the checking process will be automated in the future, whereby every tenant will be screened before they can contact any landlord. For those who do not meet the company’s standards, they will be
rejected outright to lower the risk of default.
“If everything goes well, both the landlord and tenant will sign a one-year tenancy agreement on the platform. We will then send the agreement to the Inland Revenue Board of Malaysia for stamping. Everything is done in a professional manner and adheres to the law,” he adds.
With objective data in place, would landlords be able to specify their requirements for tenants on Speedrent? Wong admits that when it comes to home rental, there may be some ethnic or religious stereotypes, and the platform is trying to break this.
He says the app does not help landlords filter tenants. However, it provides an option to “accept all nationalities”, and landlords can decide whether to opt in or out.
“Opting out indicates that the landlord may have some preferences and may not entertain certain chat requests. Prospective tenants who are of a different ethnicity or religion may refrain from contacting these landlords. However, we encourage landlords to opt in. In return, their property will be ranked higher in the search list, which will reach more prospective tenants.”
Every tenancy agreement signed on the platform is covered by the landlord insurance provided by Allianz General Insurance, says Wong. Speedrent charges landlords a fee equivalent to a month’s rent as operational fee for every tenancy agreement sealed.
“Landlords do not need to make a separate payment for this insurance. The insurance premium is bundled with the operational fee. The policy has also been standardised based on the monthly rental of the property,” he explains.
For example, if the monthly rental is RM1,000, the tenant has to pay RM2,000 to the platform, which will be the rent for the first and twelfth months. Speedrent will transfer RM1,000 (rent for the first month) to the landlord. The remaining RM1,000 (rent for the twelfth month) will be kept in the platform’s account as its operational fee and payment for the insurance premium.
“The advantage of our model is that we do not ask landlords to pay us a fee. Technically, they do not have any monetary transactions with the platform after sealing an agreement. We take the rent for the twelfth month as our fee,” explains Wong.
“If, for example, tenants decide they cannot afford to continue staying at the house and move out in the third month, the landlord will still receive three months’ rent. This is because what the platform keeps is the rent for the twelfth month, which the tenants had paid up front. If there are any other losses, those would be covered by the insurance.”
In future, Speedrent is looking to offer value-added services such as providing a list of plumbers to tenants on behalf of landlords, should the need arise, says Wong. This would help landlords save more time and energy.
Speedrent currently has more than 60,000 registered users and over 20,000 listings. The app can be downloaded for free on the App Store or Google Play.