PROPTECH-X ‘Proptech & Property News’: Reapit | InventoryBase | Mortgage Changes

In today’s news, Andrew Stanton looks at QC Alison Levitt’s RICS report, Proptech’s rapid maturation, and Rightmove’s August predictions.

Daily bite-sized proptech and property news in partnership with Estate Agent Networking.

Reapit acquires estate agency marketing tech

I confess that although Reapit is not a client, I do have a strong bond to their brand, their vision, and their strategic business sense. Accel-KKR, the private equity firm backing Reapit, are making shrewd moves to leverage its value. The Reapit brand is one known to many in the UK real estate space and one I have followed closely for over two decades. 

I report in full their press release of the 13th of August, as it shows how the marriage of established businesses can really generate a huge impact by giving companies access to new marketplaces.

London, UK – August 13, 2021 – Reapit, backed by technology-focused private equity firm Accel-KKR, today announced that they have completed the acquisition of Mindworking A/S Limited, the leading provider of estate agency and marketing technology in Denmark. Mindworking also has customers in Norway and Finland.

The Mindworking solution has grown exponentially since launching their innovative technology in 2003. Today, approximately 80% of Danish real estate agents rely on Mindworking’s software for automated production and delivery of their marketing material via intelligent templates, saving estate agencies significant external design fees as well as internal time spent on core real estate operations. Mindworking’s case-handling system has also become increasingly relied upon by Danish real estate agencies. 

Reapit, an Estate Agency Business Platform provider, delivers software solutions to 65,000 users in 5,200+ offices and supports in excess of 225,000 tenancies across the UK and Australia. This acquisition comes as part of Reapit’s ambitious global expansion programme and provides Reapit with a firm foothold in Northern Europe. 

Mark Armstrong, CEO, Reapit, commented, “I am delighted to confirm that Reapit has acquired Mindworking, a market leader in Danish estate agency software. Their market-leading solutions epitomise the quality of innovation that Reapit has become known for. We’re very excited to combine Mindworking’s local market knowledge with Reapit’s international expertise to support Claus and his talented team to cement their leadership position in Denmark, increase the depth and breadth of their offerings to their market and expand further into the Nordics and beyond.”

Claus Mathorne, Founder and CEO of Mindworking, said: “The Mindworking team is incredibly proud of the quality solutions we’ve brought to our valued customers during the past 18years since we’ve first disrupted the traditional marketing value chain.”

Mathorne added: “With access to Reapit’s solid and extensive estate agency know-how and world class R&D support, we look forward to expanding our market leadership position as well as enhancing our offer and time-to-market approach with global best practice and innovation, empowering our customers to grow and prosper, and to successfully navigate the digital transformation of real estate.”

Mathorne continues to be heavily involved in the business, he will remain as CEO of Mindworking within Denmark and will become a General Manager of Mindworking under the Reapit brand. Mathorne also becomes a shareholder in Reapit. The acquisition will not affect the current business for customers and employees of Mindworking.

Park Durrett, Managing Director of Accel-KKR and a member of Reapit’s board of directors commented, “We are pleased to support Reapit with their acquisition of Mindworking, which marks their expansion into Continental Europe and with it, the delivery of Reapit’s commitment to PropTech excellence in a new region. The combination of Reapit’s expertise, resources and support with Mindworking’s marketing solutions will undoubtedly bring significant value to the estate agency industry in the region.”

35-year mortgage terms are becoming the norm 

According to a recent article in MortgageSolutions, there are figures to support the fact that the traditional 25-year mortgage term may be consigned to the history books. 

The article states: “The number of mortgages taken out with terms of 35 years or more has risen 70 per cent year-on-year, discounting 2020, with 25,112 long-term deals sold in March this year. In March 2019, 14,765 deals with mortgage terms of 35-years or more were sold. In March 2018, 14,683 long-term mortgages were sold.”

Speaking as a person who only knew a world full of 25-year mortgage terms, having marketed over 18,000 properties many to people who took out these types of lending products, I think there are two things at play.

First, property prices are outstripping wages, especially with the turbocharged 2021 market fuelled by the SDLT holiday. Second, as a generation thing, people are living longer. In 1985, when I first sold property, many people working in heavy industries retired at 60 and were dying within a decade, now the millennials may well live into their 90s and 100s, so a thirty-five-year mortgage is relatively the same deal. 

The real kicker is of course the amount of interest added to a mortgage if it’s paid off over a longer period, amounting to a win for the lender. Although, house inflation may well offset this too. 

If PRS has an EPC rating of C, who will foot the bill? 

Since the bill has passed its first outing in parliament, there are plans afoot that mean rental properties in the PRS should have a C rating for energy efficiency. At present, the legal EPC level is only E or above.

InventoryBase, hearing of the proposal, stated that: “The Department for Business, Energy and Industrial Strategy (BEIS) is considering proposals to increase the energy efficiency (EPC Rating) requirement for private rental sector properties to a C rating for all tenancies by 2028. 

Some landlords see this as by far the biggest threat to the buy-to-let market. It’s not far off and with all the other legislative changes, issues surrounding non-payment of rent due to the effects of the pandemic and changes to tax laws; will landlords now start to exit the PRS?

From April 2020 it became illegal to rent out a property with an EPC rating of less than E and it’s about to get a whole lot tougher. Latest surveys show that only 2% of homes currently have A and B EPC rating, with around 85 per cent having either C or D rating. Of the 4.5 million private rented homes in the UK, it is estimated that 1.7 million properties will never achieve an EPC rating of C or higher. 

As well as the proposal to raise the minimum EPC rating for private rental property to grade C, the new legislation could see private landlords facing fines, imposed by local Councils, of up to £30,000 for non-compliance.”

Of course, all of this upgrading of rental properties will come at a cost, and if it were to come into being in 2028, for my money that cost will be an increase in rents, which of course falls on the shoulders of people who rent.

Again, InventoryBase has some thoughts on this too.

“…the challenges posed by EPC 2028 both in terms of the costs involved in meeting the new standards and the limitations posed by “green lending” requirements will inevitably lead to a restructuring of the PRS. Over 80% of landlords surveyed who are renting property below C grade felt that the proposed EPC rating would cause them to sell or at least reduce all or some of their stock.

Not only could we see landlords exiting the rental market because of EPC regulations and impacting the choice and costs for tenants, but we could also see a transference of the issues of energy-efficient homes to owner-occupiers as a result of rental property sales.”

Let us hope that those in parliament take all of this into account.

Andrew Stanton is the founder and CEO of Proptech-PR, a consultancy for Founders of Proptechs looking to grow and exit, using his influence from decades of industry experience. Separately he is a consultant to some of the biggest names in global real estate, advising on sales and acquisitions, market positioning, and operations. He is also the founder and editor of Proptech-X Proptech & Property News, where his insights, connections and detailed analysis and commentary on proptech and real estate are second to none.

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