This is not the first time I write about Stockholm’s troublesome housing situation, nor will it be the last. It is an overheated market, and the question whether there is a housing bubble or not is one of the most discussed here in the Swedish capital. Yesterday I talked to Mattia Tosti who is the co-founder of Qasa, a new start-up company in Stockholm that tries to fix Stockholm’s broken housing market.
Finding a place to live can be difficult here and, assuming that you would want to rent, there are several ways you can try to find a new room, apartment, or basement. The first option is to join one of the housing queues, but as most Stockholmers can tell you, the average waiting time is about 8.4 years. For those who do not want to live under a bridge while waiting, there is the option to rent in the second hand market. The most common way to do this is by using Blocket, an online marketplace where private people sell everything from their used underwear till houses. The second hand market, however, is also filled with insecurities, for both the landlord and the tenant.
In the current system a lot of power lays at the landlords’ side. They can decide from many people, who they wants to rent out to. This can result in hard prerequisites for apartment seekers: no pets, no smoking, or not being allowed to use the kitchen (true story!). For the potential tenant there are even more insecurities, will the landlord give me back my deposit and/or does the apartment that I’m paying a deposit for even exist? Especially this last issue has been quite a lot in the news during the last few years. People are so desperate for an apartment that scam artists lure house seekers in paying large amounts of money without offering them an actual place to live. But for the landlords the biggest insecurity is that a renter doesn't pay his rent.
According to Tosti these insecurities have resulted in an inefficient system, in which homeowners (i.e. potential landlords) are hesitant to rent out rooms or apartments because of the problems on the second hand rental market. The service that was developed by Tosti and his team does not only bring possible landlords and tenants together, but also tries to eliminate as many insecurities as possible, by being a middleman throughout the rental period.
In practice this means that they have developed a website through which the two sides can find each other, a mix between Tinder and Airbnb for long term contracts. You might think that a platform that brings supply and demand together is not new, what is the difference with the earlier mentioned Blocket. Well, for starters, both the seekers and the suppliers are screened by Qasa, as seekers have to use their social security number and hand in a credit report about themselves, so that the landlords can be more certain that they are dealing with a trustworthy person. In addition, if the renter would default in any way, the landlord is guaranteed one month rent that was paid as deposit by the renter (enough time to find a new renter). The landlords, however, are not the ones who hold the deposit. This means that if there is no house the renter will never have paid directly to the landlord, which means the system is scam-proof (until con artists find a loophole of course).
Providing a solution to the inefficient housing market is, according to Tosti, not only fruitful to the individuals trying to find or rent out an apartment, but also has the ability to stimulate economic growth. Currently, the housing shortage would force companies to move to other cities and sometimes even abroad, because when they grow they are unable to house, thus hire, employees from outside Stockholm. This limits the possibilities for economic growth in the Stockholm region, making the difficult housing market problem one of the most important to fix.
Another goal of Qasa is to increase supply. During the interview Tosti refers to a three year old report that showed that 40,000 apartments are partly or permanently unused by their current owners. By making the rental sector more transparent and secure Qasa hopes to motivate owners of unused equity to start renting out. It seems, however, unclear whether insecurity and a un-transparency are the main reasons why that group of people is not renting out apartments. This is particularly doubtful because most power already lays at the landlord’s side. Also, securing a month of rent is maybe not so interesting for people who currently accept to not receive any rent at all.
The business model of Qasa is based on charging a monthly 4% fee of the rent. the landlord will most likely add this cost to the sum he already had in mind. This raises the question if the service will not just add to the already high rental costs in Stockholm.
As Qasa has been up since a a couple of months, running in a Beta version, many things are yet unfinished and uncertain. For instance, people who want to search houses through Qasa currently require a Swedish social security number, foreigners are not able to use the service, even though this is one of the groups that would benefit most from the new service and therefore forms an interesting clientele for Qasa.
Qasa has certainly found a gap in the market and I am charmed by the innovative way they try to fix the second hand rental housing sector. For the future the main questions for Qasa will be of they provide enough benefits to compete with the traditional platforms, if they are able to motivate potential landlords to start renting out and if the service will not just add to the already high rental prices.