July 18, 2024 • 23 mins
Want to know how a Proptech company can transform lease extensions from costly and confusing to simple and affordable while maintaining a five-star average on Trustpilot?
In our latest podcast, Caroline Bray from HM Land Registry speaks to Josef Wasinski, CEO and founder of Zero Down Lease, a company dedicated to helping customers navigate the complex area of lease extensions, taking away the fear and confusion.
Josef explains why he set up Zero Down Lease, the range of datasets they use, including HM Land Registry’s leasehold data, and the difference that taking part in the Geovation Accelerator Programme made in forming his company.
Applications for the next Geovation Accelerator Programme are currently open until 30 August: https://geovation.uk/apply/accelerator/
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Music.
(00:09):
Hello and welcome. My name is Caroline Bray. I work for Land Registry and my
role in Land Registry is supporting PropTechs on the Geovation Accelerator Programme.
So this is a programme that supports early stage startup companies with property
and location data that work on solutions to helping improving the home buying
and selling process and things around the home buying and selling process.
(00:32):
Music.
I'm delighted to be joined today by Josef Wasinski, who is the CEO and founder of Zero Down Lease.
Hello, Josef. How are you today? Hi, Caroline. Thanks for having me.
Yeah, yeah, not too bad. Great.
So do you want to tell me a little bit about Zero Down Lease and what what zero
(00:56):
down lease actually does?
Sure. So zero down lease in a nutshell is trying to make leasehold home ownership fair for all.
I think everyone who glances at the paper every now and then will see stories
about how unfair leasehold home ownership can be,
whether that's excessive ground rents, expensive service charges,
(01:17):
or just people stuck in a property they can't sell or remortgaged due to the lease length.
And so what we're trying to do is to be a company that focuses solely on that problem.
We kind of joke internally, all we do is leasehold stuff, which might be quite
boring for other people, but actually is quite fun and interesting for us.
And to start with, our first product that we've launched is on lease extension.
(01:41):
So we kind of package up this costly, confusing and uncertain process into something that's simple,
straightforward forward and much more affordable all right great thank you so
who who are your main customers are they members of the public how do they find
you and how do you sort of interact with them.
(02:01):
Yeah, so there's 5.4 million leasehold properties in England and Wales.
And those are kind of effectively the total addressable market,
all the people that we could possibly help.
And of those with our first product, which are the lease extensions,
there's 1.2 million of those who will need to get their lease extended in the next 10 years.
And that 1.2 million, just a side point on data and land registry,
(02:24):
you couldn't have worked that out 5, 10 years ago. go.
And the reason for that is that the term of the lease, i.e.
How long is left on it, is something that you couldn't access unless you paid
£3 to LandRestory every single time to buy the register.
Because what a lot of people don't know about property data is that it's actually
very hard to get the nitty gritty stuff.
(02:46):
And LandRestory released the registered leases data set, which allowed us to do that analysis.
So we can say over the next 10 years, here are the properties that need to get this done.
And in terms of how we go about finding those 1.2 million, it's primarily digital advertising.
Nothing crazy. We're not reinventing the wheel here. Search engine advertising,
social media advertising.
(03:07):
We get a fair few from referrals from existing customers.
Yeah, just the kind of normal startup acquisition channels there.
Thanks, Joseph. Actually, I did take a quick look at your Trustpilot reviews,
use and that you've got 63 of them and they're all like really good
but one that really stood out for me because I
think it just came out to win the screen zero down
(03:28):
lease is much more than a five star so you're obviously doing
something right with all these customers that you're bringing on
board and helping them with their leasehold properties it's also really good
to hear that you are making good use of the leasehold data set from land registry
because that's one of of the reasons we joined Geovation was to actually get
(03:49):
more people access to the data sets we have.
So that's great news for us. So thank you for that feedback.
Just going into Geovation itself. So I think you were, if I remember rightly,
you were selected in spring 22.
You came onto the program then, is that right?
Yeah, yeah. So the business was founded two years ago in March.
(04:09):
So we're a little over two years now and yeah
when we joined geovation it was a shadow
of what we are today so we had it was myself and one or two other people working
part-time and we'd done a handful of sales we didn't know anywhere near what
we know today and we kind of entered into geovation with the start of something
(04:32):
like we didn't actually have everything bottomed out everything fully,
clear, but we knew we'd found a problem.
And I think what Geovation was really useful for us was to help.
Refine that problem really help us understand who we're serving and how we go
about serving them and what our solution and product should be for them because
(04:54):
you know most of our customers are,
homeowners themselves you know they're not necessarily like we
get a handful of landlords we get a handful of companies we
have a handful of actually institutional clients who use us
but the vast majority are just people who own a flat and when we joined Geovation
as I said it was a small shadow of what we are today because we didn't have
(05:18):
the team we were you know not actually making great revenues and at the end of the program we'd.
Had a plan we had a team actually being on Geovation it was a big factor of
me bringing on my co-founder either because it just gave us some credibility.
And from there, we've grown significantly and we're in a really good place where
(05:41):
we've done pretty much everything you can do in lease extensions.
We've gone to court in one, we've gone to tribunal in one, we've extended £60
million plus of leasehold properties.
Yeah, we've made a lot of progress. progress so
joseph just um going back over this
what made you decide on leaseholds as a problem what made you decide to try
(06:02):
and fix the the issue of leasehold extensions yeah i don't think anyone grows
up thinking do you know what company I really want to start a company in lease
extensions or leasehold issues
uh so it's actually i think how most people start business business,
is they experience the problem themselves.
So I've been an entrepreneur my whole life, or I think more appropriately,
(06:25):
unemployable. I have to be my own boss.
And so my previous company was actually a company called Wayhome,
which was in the prop tech space as well.
And I took that company with my co-founders from zero to a half a billion pound
joint venture with Allianz.
And I kind of got, frankly, a bit bored because I like the chaos of the early
days. And when you're a big institutionally funded company, it gets a bit slow.
(06:49):
So I left that and kind of went out and thought I'd sit on a beach for a year
and think about what I wanted to do.
And I got bored because I actually like building businesses. It's fun for me.
And so I kind of went through a long list of ideas that I've written down.
I thought about them all.
And the one that came out on top was the leasehold extension issue because I
(07:14):
bought a flat and And it was an ex-council flat, and it had 88 years on the
lease. And I was like, hmm.
I knew from building WayHome that once you get below 80 years,
that's the point you need to start doing stuff.
I was like, OK, let me look at how I'd extend the lease.
And I was just confused. I was lost and confused. I didn't understand.
(07:35):
And that had been after spending seven years building a prop tech startup across the whole thing.
So valuation, the legal process, institutional fundraising, building risk scoring,
how to do all this stuff. I was confused.
And my realization, if I'm confused, how is someone who isn't a professional
in this space, how are they going to navigate this?
(07:56):
And that merged with the land registry data set, which I kind of quickly hacked
together a rough estimate on.
I realized, okay, so this is a large and growing market.
And it's a complex problem that's currently
solved by a long tail of small local
firms that is a good problem
(08:18):
to solve because if you can specialize and you
can use technology you can outperform any
generalist and then it's just you're competing with
the specialists and if you can build a better
business than them then you'll do well and so
that was the starting point of it and I was actually I
was working right now I was actually in Nicaragua of all places
(08:41):
and i built the
website on a beat i did chuck
some ads up did the first calls and i sold my first customer i didn't have a
bank account i didn't have a company set up and so i quickly set up the company
quickly set up a bank account all from a non-uk ip address which was fun and
then got our first payment and then that was the kind of starting point and
(09:04):
from there it's It's just been growing and,
you know, solving the problem better and better as we move on.
So Joseph, I know that you use the leasehold data set from Land Registry.
What other data do you incorporate into Zero Dan Lease?
So what is amazing about UK property data is it's probably the best in the world.
(09:25):
So I've got some friends who are doing property startups in the US and a mind-blowing
stat there is that all of the equivalent of price pay data is all held at the county level.
And so there There isn't actually just a centralized register where you can
go that's government mandated of all the sales and even just address stuff.
We also take that for granted over here. So I've got, I know someone was trying
(09:47):
to do something in Japan and Japan, the address system in Japan is insane.
An address would be, it's the blue house, the second on the right from the church.
And so the power that we have in the UK is that there is lots of really,
really good data from the government. And it's all relatively well-structured,
and a lot of it's getting tagged to a key.
(10:09):
So, for example, the data sets that we use are – so we use the registered leases
because that has data about the lease term, which tells us how long that person's
got to stay on the property.
We use data like the energy performance certificate, the EPC data.
So if you have a buy or sell a house, if you see at the bottom of Rightmove
or Zoopla or have the little score band like you'd get on a fridge,
(10:29):
that data is all public data. so you can go find out how big the property is,
the condition of it, the size.
Because one of the interesting little niggles about a lease extension is that
you have to account for any,
improvements that they've made, but not improvements like you or I would think
about in terms of like a new kitchen or a new bathroom, but things like central
(10:50):
heating or double glazing windows.
Because if a property was leased originally, say in the 50s,
there might not have been central heating and there definitely would have been double glazing.
And so in those scenarios, you would be looking for those things as flags that would feed in.
And so also, you know, we use the land free price pay data, which is when a
property was sold for and how
much we look at the index data to work out roughly what it would be worth.
(11:14):
So we take all of these data sets, we merge them all together to help us kind
of understand the property itself and kind of give a rough estimate of what
the cost of the lease would be.
And i think that's the really interesting thing about all of this
open data is that i'm sure if you are someone who
is making the epc register data the first time
the impact of knowing if a property was double glazed to a business like ours
(11:39):
they'd never guess it but it is and i think that's the power of the more of
this data there is and the more it's kind of keyed off things like uprn or which
is the ordnance survey address based product which effectively gives a number to every property.
So you can say property number 12 is this property, and then you can tag the
(11:59):
lease to it, you can tag the EPC data to it, and you can tag all these other data sets.
So it makes it easy to then get a holistic picture of the property,
rather than having 50 data sets you can't really merge together into one.
Thanks. I mean, that's really interesting. That's conversations we have in Geovation
a lot of the time about how you link data sets,
and everyone wants to be able to link them easily and i
(12:20):
think although the data sets that everyone publishes aren't
perfect they are a really good indicator and
a really good start of what people can do which um and you've shown
that within zero down lease but just going back to the the accelerator program
itself so what do you think the main benefits you you got from being part of
the program say in the first six months up to when you did the showcase yeah
(12:43):
so i think there's kind of four or five that that stick out to me.
One of the things the program offers is it offers kind of coaching and mentoring.
Now, for someone like me, that wasn't as useful because I've done a lot of stuff
before, but it was still useful to have experts to bounce stuff ideas.
So a lot of the time there'd be like, here's a talk around building a financial
(13:06):
model, or here's a talk around marketing, which...
Were kind of useful refreshers but the really valuable bit was with
all of them you'd have time with that expert afterwards and
so then i could go through and ask actually more technical detailed questions
that i wouldn't have access to otherwise so the first bit was yeah experts
to bounce ideas off and kind of actors almost
(13:27):
like part-time supporters of the business which was
really useful the next one was just being
around other startups you don't know everything and
startup founders are everyone i've ever met as
a founder has been very very generous with their time and willing to help out and
so just having other people who are in
the same boat who can bounce ideas off like
(13:48):
oh i'm fundraising and you know what do
you think of my deck or other introductions you can make or
we're looking to hire someone do you know anyone or can you
look at my web like all those different things it's really
useful actually we've made lots of instructions from ourselves to
other companies in geovation in terms of
referring business and vice versa and so you get
(14:08):
those really nice kind of synergies where you
know even if you're attacking similar problems
it's very rare you have exactly the same company so that's
the third one i think fourth obviously was we got a bit of cash and when you're
early on cash is tight and it gives you that little bit of extra risk buffer
to pay things so that money was used to hire one of our first employees and
(14:32):
that gave there's some cash to not make that a crazy risk.
The last one is office space. It is really nice to have one.
So way back in the day, there used to be Google Campus, which was a free office
space that all the startups used to go to.
And you have to queue up in the morning outside to get a desk.
But they shut that down probably five, six years ago now. So there isn't really
(14:54):
a space that you can go as a startup and get access to office space to grow and innovate.
And I think that that's a really high leverage way because once you've got an office,
it does just create it, give a little bit
more certainty a little bit more reality you know when
talking to people and interviewing it just it
makes it real and it's uh yeah nice not
(15:16):
be stuck at your your home office working every single
hour of every day so yeah i think those are those are the big things what would
you say your your your the biggest highlights are from the time you've been
doing zero down lease what's a really good question so you mentioned our reviews
i think I think that's a really big part of this for me.
(15:37):
You know, if you want to make a lot of money, people think you go into business,
but actually just go work for someone like Google for 20 years and save half
your salary and you'll make a lot more money on average than a typical startup founder.
I think it's the fact that we are genuinely helping people.
Not everyone gives us a review. We have hundreds of happy customers,
(15:58):
and we are genuinely helping them in a way that's more than just a lease extension.
No one wants to do a lease extension. It's a blocker towards something they actually want to do.
They want to sell to be close to family. They want to remortgage so they can
take some cash out and help their kid with university fees.
There's always a reason. and this big
(16:19):
scary thing gets in the way and if anyone's
listening who's bought a home you would have dealt with a solicitor
who gave you a pile of documents and you probably had
no idea what you're doing or what the process was and you
asked your friends you asked your family like what does this mean how does that
work and with a lease extension you can't really do that because there is no
(16:40):
one you can go to because there are by our kind of estimates about 50 000 lease
extensions a the year versus about kind of, I think about half a million property transactions.
And so you've got a factor of 10 fewer. And also it's the type of thing that
everybody at some point will buy a property or know someone who's bought a property.
No one really knows someone who's done a lease.
(17:01):
And so we kind of have to take a lot of handholding for people on the journey.
And that I think is the really important thing for us is that,
you know, we've taken cases where it's difficult and
where there's lots of issues and we've helped people and we've um yeah we've
had some really difficult scenarios where you know we've got one client where
(17:22):
she's a nurse and she's planning on retiring and she's got this really difficult
situation legally and if she went to normal firm.
They wouldn't have been able to help because it's such a niche issue.
She probably spent 20,000 pounds in legal fees on a flat that's only worth a
couple of hundred thousand pounds.
(17:42):
And that's a lot of money for someone out of pocket. And so those are the things
I think that are the highlights to me are the people that we've helped along the way.
And also just the progress we're making and growing and yeah,
solving this messy problem.
I think that's really interesting too, because I've actually heard you on the
phone to some people in the hub and And the way you talk to them,
(18:03):
it's almost like you're helping.
They're not just customers. They're sort of almost become friends because you
have that one-to-one relationship with them.
And like you say, if you employed, I believe, if you employed a solicitor or
conveyance to do that for you, you wouldn't get that one-to-one relationship that you've got.
You'd have them doing the work, of course, but it wouldn't be pick up a phone,
(18:23):
ask you anything they want to.
So I think that's really valuable in what you're doing.
The thing that a lot of people don't realise is actually that when you're extending
the lease, people always look at the headline figure of, oh,
this is how much money it's going to cost me in terms of a premium.
Because in a nutshell, the way I kind of describe it is that if you imagine
a lease as a sand timer, when you buy a property and it's brand new with a long
(18:43):
lease, all the sand's at the top.
And every day that passes, sand falls to the bottom. And then what you're doing
when you're extending the lease is you're moving that sand effectively back
up to the top. It's a very rough metaphor.
What people don't realize is that you're actually rewriting,
or you should be in theory rewriting the legal contract that is your lease and
so there are there are things that can go wrong and you know i've heard of horror stories where,
(19:08):
we there was someone that we spoke to where they heard the previous owner had
done a lease extension but they'd done it informally whereas effectively just
a contract between them and the freeholder they didn't rely on the statutory
rights and protections they have and it changed Changed it from,
I think, a hundred pound year ground rent to one that was 500 pounds and doubled every five years.
(19:30):
And the thing is you do the math on that and it's 500, then it's a thousand,
then it's 2000, then it's 4,000, then it's eight.
And it was a 250 year term. And at the end, it was millions of pounds a year in ground rent.
So that person had done an informal lease extension to add time on.
So they were moving the sand back up, but they'd rewritten the contract in a
way that effectively made the property worthless.
(19:52):
Because why would you buy a flat where you're paying, and it wasn't even that
expensive, it was maybe 300,000 pounds, and you're paying 10,000 pounds a year
in ground rent on it in 15 years' time.
I think that's when you look at all of the startups out there,
the ones that do niche down and really focus on their customer,
they do well because they can make sure the customer gets a good outcome.
(20:13):
Yeah, I totally agree with you there.
So what next for zero down lease then? Where are you going now?
That's a very good question.
So the big thing that's up in the air with everyone in this space right now
is the leasehold reforms.
And so for those who don't know, well, leasehold reform is a topic that's been
(20:33):
going on since the 1800s. And you can actually find quotes from Churchill on
leasehold reform and how unfair fair it is and how it all needs to be scrapped.
So you get an idea of how long this has been going.
And the core reason why it's so difficult is that you've got effectively contracts
been entered into typically under the advice of a solicitor by a freeholder and a leaseholder.
(20:54):
And the problem you have is in order to make it cheaper for a leaseholder,
you effectively have to take money from the freeholder.
And so you have this challenge and tension there that whilst everyone Everyone
would agree, at least although home ownership is outdated, feudal, and deeply unfair,
the challenge that you have is that everyone, including companies,
(21:17):
all legal persons, which include companies, have human rights,
one of which is the rights to the peaceful enjoyment of your property.
So the government can't come along and unilaterally say, your property is now worthless.
Now, what they can do, they can force someone to, say, sell a house because
they want to build a motorway.
Because one house versus the benefit society of that motorway is outweighed.
(21:39):
The government would have to pay you money for that house, but they could force you to sell it.
Now, the challenge with the leasehold freehold is that in order to make it cheaper
for the leaseholder, you have to effectively take money for the freeholder.
Because if I was a freehold investor and I bought a plot of land that I thought
was worth £50,000, and now the government says, okay, all those leases that
(22:01):
would add up to to 50,000 pounds when they extend.
It's now worth five, I've lost out. And so you have this really interesting
challenge that over the next few months will hopefully play out,
but it will dictate what our future looks like.
Because at one end, it could be much more streamlined and simple,
(22:22):
which would be great for everyone.
And we'll be focusing more on the kind of technology side of things and the
data side of things, because the market will be more commoditized,
which will be a good thing for leaseholders.
If it's less like that, and it's still the kind of artisanal legal process that
it is right now, then we're focusing more on catering for those exemptions and
(22:43):
exemptions rather than building that kind of almost cookie cutter process.
Well, I think lots to look forward to then within the next few months and lots
of challenges, I imagine, too.
Thanks so much, Joseph, for joining me today. It's been great to talk to you.
And I think it will have given lots of people lots of information about leasehold
(23:03):
extensions and how important they are and what solutions there are out there
such as Zero Down Lease. Thanks so much, Joseph.
See you in the hub soon. Yeah, thanks. Bye.
Music.
(00:09):
Hello and welcome. My name is Caroline Bray. I work for Land Registry and my
role in Land Registry is supporting PropTechs on the Geovation Accelerator Programme.
So this is a programme that supports early stage startup companies with property
and location data that work on solutions to helping improving the home buying
and selling process and things around the home buying and selling process.
(00:32):
Music.
I'm delighted to be joined today by Josef Wasinski, who is the CEO and founder of Zero Down Lease.
Hello, Josef. How are you today? Hi, Caroline. Thanks for having me.
Yeah, yeah, not too bad. Great.
So do you want to tell me a little bit about Zero Down Lease and what what zero
(00:56):
down lease actually does?
Sure. So zero down lease in a nutshell is trying to make leasehold home ownership fair for all.
I think everyone who glances at the paper every now and then will see stories
about how unfair leasehold home ownership can be,
whether that's excessive ground rents, expensive service charges,
(01:17):
or just people stuck in a property they can't sell or remortgaged due to the lease length.
And so what we're trying to do is to be a company that focuses solely on that problem.
We kind of joke internally, all we do is leasehold stuff, which might be quite
boring for other people, but actually is quite fun and interesting for us.
And to start with, our first product that we've launched is on lease extension.
(01:41):
So we kind of package up this costly, confusing and uncertain process into something that's simple,
straightforward forward and much more affordable all right great thank you so
who who are your main customers are they members of the public how do they find
you and how do you sort of interact with them.
(02:01):
Yeah, so there's 5.4 million leasehold properties in England and Wales.
And those are kind of effectively the total addressable market,
all the people that we could possibly help.
And of those with our first product, which are the lease extensions,
there's 1.2 million of those who will need to get their lease extended in the next 10 years.
And that 1.2 million, just a side point on data and land registry,
(02:24):
you couldn't have worked that out 5, 10 years ago. go.
And the reason for that is that the term of the lease, i.e.
How long is left on it, is something that you couldn't access unless you paid
£3 to LandRestory every single time to buy the register.
Because what a lot of people don't know about property data is that it's actually
very hard to get the nitty gritty stuff.
(02:46):
And LandRestory released the registered leases data set, which allowed us to do that analysis.
So we can say over the next 10 years, here are the properties that need to get this done.
And in terms of how we go about finding those 1.2 million, it's primarily digital advertising.
Nothing crazy. We're not reinventing the wheel here. Search engine advertising,
social media advertising.
(03:07):
We get a fair few from referrals from existing customers.
Yeah, just the kind of normal startup acquisition channels there.
Thanks, Joseph. Actually, I did take a quick look at your Trustpilot reviews,
use and that you've got 63 of them and they're all like really good
but one that really stood out for me because I
think it just came out to win the screen zero down
(03:28):
lease is much more than a five star so you're obviously doing
something right with all these customers that you're bringing on
board and helping them with their leasehold properties it's also really good
to hear that you are making good use of the leasehold data set from land registry
because that's one of of the reasons we joined Geovation was to actually get
(03:49):
more people access to the data sets we have.
So that's great news for us. So thank you for that feedback.
Just going into Geovation itself. So I think you were, if I remember rightly,
you were selected in spring 22.
You came onto the program then, is that right?
Yeah, yeah. So the business was founded two years ago in March.
(04:09):
So we're a little over two years now and yeah
when we joined geovation it was a shadow
of what we are today so we had it was myself and one or two other people working
part-time and we'd done a handful of sales we didn't know anywhere near what
we know today and we kind of entered into geovation with the start of something
(04:32):
like we didn't actually have everything bottomed out everything fully,
clear, but we knew we'd found a problem.
And I think what Geovation was really useful for us was to help.
Refine that problem really help us understand who we're serving and how we go
about serving them and what our solution and product should be for them because
(04:54):
you know most of our customers are,
homeowners themselves you know they're not necessarily like we
get a handful of landlords we get a handful of companies we
have a handful of actually institutional clients who use us
but the vast majority are just people who own a flat and when we joined Geovation
as I said it was a small shadow of what we are today because we didn't have
(05:18):
the team we were you know not actually making great revenues and at the end of the program we'd.
Had a plan we had a team actually being on Geovation it was a big factor of
me bringing on my co-founder either because it just gave us some credibility.
And from there, we've grown significantly and we're in a really good place where
(05:41):
we've done pretty much everything you can do in lease extensions.
We've gone to court in one, we've gone to tribunal in one, we've extended £60
million plus of leasehold properties.
Yeah, we've made a lot of progress. progress so
joseph just um going back over this
what made you decide on leaseholds as a problem what made you decide to try
(06:02):
and fix the the issue of leasehold extensions yeah i don't think anyone grows
up thinking do you know what company I really want to start a company in lease
extensions or leasehold issues
uh so it's actually i think how most people start business business,
is they experience the problem themselves.
So I've been an entrepreneur my whole life, or I think more appropriately,
(06:25):
unemployable. I have to be my own boss.
And so my previous company was actually a company called Wayhome,
which was in the prop tech space as well.
And I took that company with my co-founders from zero to a half a billion pound
joint venture with Allianz.
And I kind of got, frankly, a bit bored because I like the chaos of the early
days. And when you're a big institutionally funded company, it gets a bit slow.
(06:49):
So I left that and kind of went out and thought I'd sit on a beach for a year
and think about what I wanted to do.
And I got bored because I actually like building businesses. It's fun for me.
And so I kind of went through a long list of ideas that I've written down.
I thought about them all.
And the one that came out on top was the leasehold extension issue because I
(07:14):
bought a flat and And it was an ex-council flat, and it had 88 years on the
lease. And I was like, hmm.
I knew from building WayHome that once you get below 80 years,
that's the point you need to start doing stuff.
I was like, OK, let me look at how I'd extend the lease.
And I was just confused. I was lost and confused. I didn't understand.
(07:35):
And that had been after spending seven years building a prop tech startup across the whole thing.
So valuation, the legal process, institutional fundraising, building risk scoring,
how to do all this stuff. I was confused.
And my realization, if I'm confused, how is someone who isn't a professional
in this space, how are they going to navigate this?
(07:56):
And that merged with the land registry data set, which I kind of quickly hacked
together a rough estimate on.
I realized, okay, so this is a large and growing market.
And it's a complex problem that's currently
solved by a long tail of small local
firms that is a good problem
(08:18):
to solve because if you can specialize and you
can use technology you can outperform any
generalist and then it's just you're competing with
the specialists and if you can build a better
business than them then you'll do well and so
that was the starting point of it and I was actually I
was working right now I was actually in Nicaragua of all places
(08:41):
and i built the
website on a beat i did chuck
some ads up did the first calls and i sold my first customer i didn't have a
bank account i didn't have a company set up and so i quickly set up the company
quickly set up a bank account all from a non-uk ip address which was fun and
then got our first payment and then that was the kind of starting point and
(09:04):
from there it's It's just been growing and,
you know, solving the problem better and better as we move on.
So Joseph, I know that you use the leasehold data set from Land Registry.
What other data do you incorporate into Zero Dan Lease?
So what is amazing about UK property data is it's probably the best in the world.
(09:25):
So I've got some friends who are doing property startups in the US and a mind-blowing
stat there is that all of the equivalent of price pay data is all held at the county level.
And so there There isn't actually just a centralized register where you can
go that's government mandated of all the sales and even just address stuff.
We also take that for granted over here. So I've got, I know someone was trying
(09:47):
to do something in Japan and Japan, the address system in Japan is insane.
An address would be, it's the blue house, the second on the right from the church.
And so the power that we have in the UK is that there is lots of really,
really good data from the government. And it's all relatively well-structured,
and a lot of it's getting tagged to a key.
(10:09):
So, for example, the data sets that we use are – so we use the registered leases
because that has data about the lease term, which tells us how long that person's
got to stay on the property.
We use data like the energy performance certificate, the EPC data.
So if you have a buy or sell a house, if you see at the bottom of Rightmove
or Zoopla or have the little score band like you'd get on a fridge,
(10:29):
that data is all public data. so you can go find out how big the property is,
the condition of it, the size.
Because one of the interesting little niggles about a lease extension is that
you have to account for any,
improvements that they've made, but not improvements like you or I would think
about in terms of like a new kitchen or a new bathroom, but things like central
(10:50):
heating or double glazing windows.
Because if a property was leased originally, say in the 50s,
there might not have been central heating and there definitely would have been double glazing.
And so in those scenarios, you would be looking for those things as flags that would feed in.
And so also, you know, we use the land free price pay data, which is when a
property was sold for and how
much we look at the index data to work out roughly what it would be worth.
(11:14):
So we take all of these data sets, we merge them all together to help us kind
of understand the property itself and kind of give a rough estimate of what
the cost of the lease would be.
And i think that's the really interesting thing about all of this
open data is that i'm sure if you are someone who
is making the epc register data the first time
the impact of knowing if a property was double glazed to a business like ours
(11:39):
they'd never guess it but it is and i think that's the power of the more of
this data there is and the more it's kind of keyed off things like uprn or which
is the ordnance survey address based product which effectively gives a number to every property.
So you can say property number 12 is this property, and then you can tag the
(11:59):
lease to it, you can tag the EPC data to it, and you can tag all these other data sets.
So it makes it easy to then get a holistic picture of the property,
rather than having 50 data sets you can't really merge together into one.
Thanks. I mean, that's really interesting. That's conversations we have in Geovation
a lot of the time about how you link data sets,
and everyone wants to be able to link them easily and i
(12:20):
think although the data sets that everyone publishes aren't
perfect they are a really good indicator and
a really good start of what people can do which um and you've shown
that within zero down lease but just going back to the the accelerator program
itself so what do you think the main benefits you you got from being part of
the program say in the first six months up to when you did the showcase yeah
(12:43):
so i think there's kind of four or five that that stick out to me.
One of the things the program offers is it offers kind of coaching and mentoring.
Now, for someone like me, that wasn't as useful because I've done a lot of stuff
before, but it was still useful to have experts to bounce stuff ideas.
So a lot of the time there'd be like, here's a talk around building a financial
(13:06):
model, or here's a talk around marketing, which...
Were kind of useful refreshers but the really valuable bit was with
all of them you'd have time with that expert afterwards and
so then i could go through and ask actually more technical detailed questions
that i wouldn't have access to otherwise so the first bit was yeah experts
to bounce ideas off and kind of actors almost
(13:27):
like part-time supporters of the business which was
really useful the next one was just being
around other startups you don't know everything and
startup founders are everyone i've ever met as
a founder has been very very generous with their time and willing to help out and
so just having other people who are in
the same boat who can bounce ideas off like
(13:48):
oh i'm fundraising and you know what do
you think of my deck or other introductions you can make or
we're looking to hire someone do you know anyone or can you
look at my web like all those different things it's really
useful actually we've made lots of instructions from ourselves to
other companies in geovation in terms of
referring business and vice versa and so you get
(14:08):
those really nice kind of synergies where you
know even if you're attacking similar problems
it's very rare you have exactly the same company so that's
the third one i think fourth obviously was we got a bit of cash and when you're
early on cash is tight and it gives you that little bit of extra risk buffer
to pay things so that money was used to hire one of our first employees and
(14:32):
that gave there's some cash to not make that a crazy risk.
The last one is office space. It is really nice to have one.
So way back in the day, there used to be Google Campus, which was a free office
space that all the startups used to go to.
And you have to queue up in the morning outside to get a desk.
But they shut that down probably five, six years ago now. So there isn't really
(14:54):
a space that you can go as a startup and get access to office space to grow and innovate.
And I think that that's a really high leverage way because once you've got an office,
it does just create it, give a little bit
more certainty a little bit more reality you know when
talking to people and interviewing it just it
makes it real and it's uh yeah nice not
(15:16):
be stuck at your your home office working every single
hour of every day so yeah i think those are those are the big things what would
you say your your your the biggest highlights are from the time you've been
doing zero down lease what's a really good question so you mentioned our reviews
i think I think that's a really big part of this for me.
(15:37):
You know, if you want to make a lot of money, people think you go into business,
but actually just go work for someone like Google for 20 years and save half
your salary and you'll make a lot more money on average than a typical startup founder.
I think it's the fact that we are genuinely helping people.
Not everyone gives us a review. We have hundreds of happy customers,
(15:58):
and we are genuinely helping them in a way that's more than just a lease extension.
No one wants to do a lease extension. It's a blocker towards something they actually want to do.
They want to sell to be close to family. They want to remortgage so they can
take some cash out and help their kid with university fees.
There's always a reason. and this big
(16:19):
scary thing gets in the way and if anyone's
listening who's bought a home you would have dealt with a solicitor
who gave you a pile of documents and you probably had
no idea what you're doing or what the process was and you
asked your friends you asked your family like what does this mean how does that
work and with a lease extension you can't really do that because there is no
(16:40):
one you can go to because there are by our kind of estimates about 50 000 lease
extensions a the year versus about kind of, I think about half a million property transactions.
And so you've got a factor of 10 fewer. And also it's the type of thing that
everybody at some point will buy a property or know someone who's bought a property.
No one really knows someone who's done a lease.
(17:01):
And so we kind of have to take a lot of handholding for people on the journey.
And that I think is the really important thing for us is that,
you know, we've taken cases where it's difficult and
where there's lots of issues and we've helped people and we've um yeah we've
had some really difficult scenarios where you know we've got one client where
(17:22):
she's a nurse and she's planning on retiring and she's got this really difficult
situation legally and if she went to normal firm.
They wouldn't have been able to help because it's such a niche issue.
She probably spent 20,000 pounds in legal fees on a flat that's only worth a
couple of hundred thousand pounds.
(17:42):
And that's a lot of money for someone out of pocket. And so those are the things
I think that are the highlights to me are the people that we've helped along the way.
And also just the progress we're making and growing and yeah,
solving this messy problem.
I think that's really interesting too, because I've actually heard you on the
phone to some people in the hub and And the way you talk to them,
(18:03):
it's almost like you're helping.
They're not just customers. They're sort of almost become friends because you
have that one-to-one relationship with them.
And like you say, if you employed, I believe, if you employed a solicitor or
conveyance to do that for you, you wouldn't get that one-to-one relationship that you've got.
You'd have them doing the work, of course, but it wouldn't be pick up a phone,
(18:23):
ask you anything they want to.
So I think that's really valuable in what you're doing.
The thing that a lot of people don't realise is actually that when you're extending
the lease, people always look at the headline figure of, oh,
this is how much money it's going to cost me in terms of a premium.
Because in a nutshell, the way I kind of describe it is that if you imagine
a lease as a sand timer, when you buy a property and it's brand new with a long
(18:43):
lease, all the sand's at the top.
And every day that passes, sand falls to the bottom. And then what you're doing
when you're extending the lease is you're moving that sand effectively back
up to the top. It's a very rough metaphor.
What people don't realize is that you're actually rewriting,
or you should be in theory rewriting the legal contract that is your lease and
so there are there are things that can go wrong and you know i've heard of horror stories where,
(19:08):
we there was someone that we spoke to where they heard the previous owner had
done a lease extension but they'd done it informally whereas effectively just
a contract between them and the freeholder they didn't rely on the statutory
rights and protections they have and it changed Changed it from,
I think, a hundred pound year ground rent to one that was 500 pounds and doubled every five years.
(19:30):
And the thing is you do the math on that and it's 500, then it's a thousand,
then it's 2000, then it's 4,000, then it's eight.
And it was a 250 year term. And at the end, it was millions of pounds a year in ground rent.
So that person had done an informal lease extension to add time on.
So they were moving the sand back up, but they'd rewritten the contract in a
way that effectively made the property worthless.
(19:52):
Because why would you buy a flat where you're paying, and it wasn't even that
expensive, it was maybe 300,000 pounds, and you're paying 10,000 pounds a year
in ground rent on it in 15 years' time.
I think that's when you look at all of the startups out there,
the ones that do niche down and really focus on their customer,
they do well because they can make sure the customer gets a good outcome.
(20:13):
Yeah, I totally agree with you there.
So what next for zero down lease then? Where are you going now?
That's a very good question.
So the big thing that's up in the air with everyone in this space right now
is the leasehold reforms.
And so for those who don't know, well, leasehold reform is a topic that's been
(20:33):
going on since the 1800s. And you can actually find quotes from Churchill on
leasehold reform and how unfair fair it is and how it all needs to be scrapped.
So you get an idea of how long this has been going.
And the core reason why it's so difficult is that you've got effectively contracts
been entered into typically under the advice of a solicitor by a freeholder and a leaseholder.
(20:54):
And the problem you have is in order to make it cheaper for a leaseholder,
you effectively have to take money from the freeholder.
And so you have this challenge and tension there that whilst everyone Everyone
would agree, at least although home ownership is outdated, feudal, and deeply unfair,
the challenge that you have is that everyone, including companies,
(21:17):
all legal persons, which include companies, have human rights,
one of which is the rights to the peaceful enjoyment of your property.
So the government can't come along and unilaterally say, your property is now worthless.
Now, what they can do, they can force someone to, say, sell a house because
they want to build a motorway.
Because one house versus the benefit society of that motorway is outweighed.
(21:39):
The government would have to pay you money for that house, but they could force you to sell it.
Now, the challenge with the leasehold freehold is that in order to make it cheaper
for the leaseholder, you have to effectively take money for the freeholder.
Because if I was a freehold investor and I bought a plot of land that I thought
was worth £50,000, and now the government says, okay, all those leases that
(22:01):
would add up to to 50,000 pounds when they extend.
It's now worth five, I've lost out. And so you have this really interesting
challenge that over the next few months will hopefully play out,
but it will dictate what our future looks like.
Because at one end, it could be much more streamlined and simple,
(22:22):
which would be great for everyone.
And we'll be focusing more on the kind of technology side of things and the
data side of things, because the market will be more commoditized,
which will be a good thing for leaseholders.
If it's less like that, and it's still the kind of artisanal legal process that
it is right now, then we're focusing more on catering for those exemptions and
(22:43):
exemptions rather than building that kind of almost cookie cutter process.
Well, I think lots to look forward to then within the next few months and lots
of challenges, I imagine, too.
Thanks so much, Joseph, for joining me today. It's been great to talk to you.
And I think it will have given lots of people lots of information about leasehold
(23:03):
extensions and how important they are and what solutions there are out there
such as Zero Down Lease. Thanks so much, Joseph.
See you in the hub soon. Yeah, thanks. Bye.
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