Lettspay bridges the gap between two previously disparate layers
With the regulatory changes brought about by DLUHC at the start of the year, many proptech companies hit a regulatory stumbling block. At LettsPay, from the moment we discovered that we could no longer hold our clients’ funds in an EMI, we hit the ground running. We were determined to find a new solution which would ensure that we would meet the new standards, our agents would remain CMP compliant and our product could continue to be fully automated and operate as it already had been.
After tirelessly searching for a bank which could offer the bespoke solution we were after and who would provide accounts for landlords (many no longer offer this service), we found Griffin.
Griffin is a bank and full-stack banking-as-a-service (BaaS) platform regulated by the Prudential Regulatory Authority (PRA) and Financial Conduct Authority (FCA). Griffin offers easy-to-use APIs, automated onboarding and bank accounts for safeguarding client money. By partnering up with Griffin, LettsPay is able to continue to offer individual landlord wallets, making your accounting journey safe and simple.
During the recent launch, our CEO & founder, Garrett Foxon, sat down with Griffin’s CCO, Adam Moulson and David Barton-Grimley (Embedded Finance Director, 11:FS) to discuss how proptech companies can leverage their banking partners to stay compliant.
Garrett explained that with the sudden new changes, EMIs are not longer licensed to hold client money and the new rules emphasise that proptech companies must hold this money directly with a bank.
Introduced through a mutual contact, Garrett and Adam recognised that increased regulatory emphasis on this requirement was about to become a widespread problem in the UK proptech market. LettsPay needed a bank that could not just offer them client money accounts, but the right technology and embedded finance capabilities to support our product.
This realisation laid the foundation for the Griffin and Lettspay partnership—and a wider banking solution to the proptech industry’s pain points.
Lettspay bridges the gap between two previously disparate layers within client accounting for property companies: the accounting itself and the banking layer that facilitates the transfer of funds. Recognising the operational inefficiencies, we developed an automation solution, which has been successful.
Rent collection has traditionally caused a daily headache for agents. They have to collect the rent which is deposited into a pooled about and then disbursed. This has to be synced with their accounts which means that typically, agents need to download CSV files from their bank, upload these to their accounting software, and then manually reconcile each payment. All this has to be repeated daily, costing precious time and money. There is also a high potential for error, which negatively impacts both landlords and tenants.
LettsPay’s existing integration with an EMI allowed it to provide real-time notifications to letting agents. They would receive immediate alerts when a tenant pays, facilitating instant fund transfers to landlords. This integration not only streamlined operations but also vastly reduced the chances of errors.
However, recent regulations now state that funds collected on behalf of landlords cannot be held in pooled accounts and must be managed directly with a bank. So LettsPay needed to integrate with a banking partner who could provide their customers with separate client money accounts for each landlord, which could be opened programmatically via modern APIs. This was the only option for LettsPay so we could continue to provide a truly automated solution.
Garrett sees the consolidation of complex regulations as the core benefit offered by LettsPay (and the proptech sector more broadly), allowing agents to focus on their primary role of managing landlord-tenant relationships. If technology can efficiently and accurately handle the bulk of the regulatory and procedural work, these clients can benefit greatly from streamlined journeys, reduced wait times, faster communication, and integrated data (which in turn enables other services, like credit scoring offering directly to tenants).
Renter numbers are rising, making the role of proptech even more critical. Adam recognises the huge potential of adjacent value pools, such as utility companies and credit services. He emphasises that while Griffin might not necessarily develop the embedded finance products, the movement of funds between these services will rely on platforms like Griffin.
Collaborations between proptech and fintech have the potential to transform the future of real estate. As we move forward, partnerships like the one between Griffin and LettsPay hold the promise of driving meaningful change in the property sector for years to come.
Watch the full interview here: