Deposit startup launches to help cash-strapped renters
Fronted is a fintech startup in the residential rental market, offering a loan-for-deposit product targeted at the 60% of renters in the UK who have no savings.
Covid-19 has led to increased demand in the rental market. Rental enquiries are up 20% in January alone. Renters’ demands are shifting, with searches for properties that have gardens, parking, garages, or balconies becoming more popular.
Renters are also the most likely to be affected financially by furlough schemes and be unable to work effectively from home.
Jamie Campbell, CEO of Fronted, said: “We are getting 1,000 applications a month coming through the site; much more than we thought we would get at this stage.
“We have launched ahead of raising capital to help renters move without needing to save up five weeks’ rent for their deposit – so they can act on their desire to move.”
Fronted was created after seeing the lack of options available for renters. All the deposit alternative products in the market are either built or owned by estate agents or align their interests to landlords. The Fronted Deposit splits the large upfront cost of a renter’s security deposit over 12 months, the usual length of a tenancy. By dividing the cost, renters no longer have to dip into savings or delay moving while they wait for their deposit to be returned.
Fronted makes money by charging 12.5% fixed interest on its Fronted Deposit product. The firm advertises approvals in 24 hours; no hard credit checks and no early repayment fees – for people who want to cost-effectively bridge between two deposits.
Co-founders Simon Vans-Colina and Jamie Campbell were part of the original teams at Monzo and Bud respectively, moving from their executive positions to start Fronted with ex-Apple and YLD co-founder Anthony Mann, responsible for apps like The Trainline.
Fronted is regulated by the FCA under cohort six of the regulatory sandbox. This allows businesses to test innovative propositions in the market, with real consumers. Previous cohorts have included Citizens Advice, Yoti and major banks including Barclays, Nationwide and HSBC.