Originally written by Iriani Amirudin and published by The Edge Malaysia.

 

Renting a house is becoming a more viable option as the current market prices may be out of reach for many aspiring homeowners. In fact, according to commercial real estate services and investment firm CBRE Group, about a third of the population in the Klang Valley are renters.

That is why Catcha Group CEO Patrick Grove and its former chief of staff Eric Tan decided to start digital renting platform Instahome, which allows users to complete bookings as well as manage rental payments and maintenance services entirely online. This means users can confirm bookings and sign tenancy agreements without ever leaving their homes.

This comes as a result of its unique features, says Tan, the platform’s CEO. “It sprang from a shared personal frustration of having been a renter.”

When he was in the UK and planning his return to Malaysia, Tan looked for rental options and was left feeling disgruntled by the opaque renting process. Half of the agents he contacted did not reply, so he had to get the help of a cousin to visit a listing for him. “Signing the contract online just wasn’t an option back then too. I just had to pay the deposit and pray everything would work out,” he recalls.

The average renter in Malaysia would be familiar with the challenges posed by the rental market. Mainstream rental websites would have the same listing, but by different agents, as well as advertise inaccurate listings, says Tan.

Instahome prides itself on having 3D virtual tours for every listing as well as vetting the locations, through its in-house team, to ensure accuracy and authenticity. A third of the transactions have been completed without physical viewings, he says.

In addition to making sure the listings stay true to the pictures on the website, the vetting process is fairly straightforward. “We simply ask, against the asking price, is the place worth it? If you’re pricing it above a certain threshold, you have to justify it and provide more,” says Tan.

Instahome is backed with seed funding from Catcha Group, an internet investment company, as well as by Tan himself and a group of early employees. Prior to this, he was in charge of driving new investment opportunities at Catcha.

“I made it quite clear to Patrick [Grove] early on that my next step would be to build companies. My secret life mission is to build great companies that create good quality jobs. So, we decided to work on this together,” says Tan.

Instahome was launched in late October last year and is currently working with more than 300 licensed agents. The team deliberately started a company during the pandemic for two reasons.

“We were always digital-centric, but now you can see that digital solutions are more relevant. We saw the perfect opportunity to launch, and it is something that will benefit people too as they have to stay home and would be more reluctant to have physical viewings,” he says.

More consolidated experience

Buyers’ sentiment is improving as loan applications are at their highest in 10 years, says CBRE. This is supported by government efforts to promote home ownership. The Home Ownership Campaign (HOC), which was planned to scale down unsold stock, recorded sales worth RM17.66 billion (28,000 units), the firm adds.

Tan says if people can pay rent on time for five years, for example, chances are they can pay the mortgage on time too. Instahome consolidates rental payment behaviour and submits this information to credit bureaus, thus designing a tenant credit score system.

Long-term renters will benefit from this as it will be easier for them to apply for loans or mortgages. Instahome also vets the potential renters before confirming the booking. Post-booking, the platform reflects the changes on their credit score, depending on their rental payment history.

“We look at similar things such as how much you make and what percentage of that needs to be used for rent. We also screen the renters online such as through social media,” says Tan.

“Most people want to become homeowners eventually. We asked how we could help them. And we decided that this would be helpful, as well as getting support from credit bureaus. Renters can also collect rewards on the website when they pay on time and exchange these rewards for services or vouchers.”

Interestingly, Instahome also plans to bring about positive change with regards to discrimination in the rental market, using the data gathered from the credit score system.

“I think that no one is born a racist. Due to information asymmetry and maybe poor past experiences, some landlords are reluctant to lease out their property to a certain profile or group of people. We try to educate them with data and show them that it is a bias, and this shouldn’t justify the blanket treatment,” says Tan, adding that the platform is looking to expand to other states in Malaysia, and beyond.