Ben Dunn Flores ‘Innovative Inhabitance: Pioneering Your Path to Cooperative Homeownership’

[00:00:00] Ben Dunn Flores: And we said, okay, we'll pay. And though I didn't realize it at the time, that is not legal, but I have since looked into the ways that people access housing justice and that is messed up as well. So if there's anyone listening to this, that's looking for a side project, have a look at how renters access court cases and court documents and weep because they are really terrible.

[00:00:22] And there's a big room for something to improve that.

[00:00:28] Gerry Scullion: Hello and welcome to another episode of This is Saïd CD. I'm delighted to have you with another cracking episode, this time with Ben Dunflores, co founder of Roost. Now I'd stumbled across this startup late one night on a post that was literally exploding on LinkedIn and that really, that post was challenging the status quo about home ownership in the UK.

[00:00:51] Now, I openly admit in this episode that I am a privileged and I'm lucky to have a home, albeit with a mortgage. But we discussed the alternative [00:01:00] paths to home ownership through the co op model that has been popularized in Central Europe. Now, I know very little about this space and I was eager to learn from Ben.

[00:01:10] He is so articulate and so knowledgeable and demonstrates everything that excites me about the future generations. We're ready to challenge the structures that many of us accepted as the only way to do something. Ben is awesome. I absolutely loved speaking with him. I wish him the greatest of success with this venture, but let's get straight into it.

[00:01:32] Ben, I am delighted to have you on the podcast. I've been... back and forth with you, but also with Andrew Bailey, who's one of your co founders of Roost. I'm excited to really kind of drill into a little bit more of the background of Roost and understand the origins and the seedlings of the idea, but maybe start off.

[00:01:53] Like I do with every episode, tell us a little bit about yourself, where you're from and what you do.

[00:01:59] Ben Dunn Flores: Hello, happy to [00:02:00] be here. You know, it's sort of quite rare that I get to talk about this from a service design perspective, so I've been quite excited. And so where I come from is that I live in a town south of London been working on usually design for people with low levels of literacy, and that's been in startups and briefly in the government.

[00:02:19] For example, I've been working with construction workers to make sure that they're not being exploited, and if they are being exploited, that the people hiring them know about that. I've been working with prisoners to make sure that they actually understand the legal basis of their sentence and worked briefly with Their startup putting sensors on water meters so that they could save millions or billions now, liters of water in commercial properties.

[00:02:41] And so taking that, I've been starting Roost to try and bring that experience into kind of the biggest problem that I'm seeing at the moment. The problem that's affecting me and all my friends and all the construction workers that I was working with, which is the private rental market.

[00:02:57] Gerry Scullion: So, it's interesting, like, a lot of the projects that you just [00:03:00] outlined there, like, literacy working in the justice system, there is an underpinning of doing the right thing, and I can hear that coming through when you're speaking, like, there wasn't the case of, like, working for a gambling company, working for McDonald's to improve their ordering process.

[00:03:16] They were all pretty pretty similar in terms of, like, their ethical kind of rootedness in making systems better. Thank you. The one that I also want to chat a little bit more on, the literacy of making sure that, was it say, you said prisoners were able to understand kind of probably contracts and situations that they're getting themselves in through the justice system.

[00:03:38] That's not a million miles away from what you're doing with Roost. I can see a connection between the two systems. So maybe start off and like, if there is a pitch, like you, you probably got this elevator pitch because I know you've just had a successful round and maybe what is that pitch for Roost?

[00:03:58] What is it?

[00:03:58] Ben Dunn Flores: So [00:04:00] the pitch for Roost is that renting is bad, or at least not as good as it could be, and that the fix to renting was invented about 150 years ago. It's called a housing cooperative. It allows for the person who lives in a home to control it, to control everything about it how long they stay there, whether, what color the walls are, for example, but it means that they're not the financial beneficiaries of the increase in land value of that home.

[00:04:25] And it means that people can. Sort of live there and have a home as a consumption good, as a place to live. But that the home as asset, the property side of it is kept in an asset block and kept away from kind of the profit seeking that comes with land speculation, because land is not capital. And so the foundation of Roost is to create something that allows for tenants to live in homes.

[00:04:52] That are good and to set up housing cooperatives to do that. And so we handle all of the cooperative law, all of the financing to [00:05:00] be able to get in there. And the experience for a tenant is just coming to our website that takes stuff from Zoop, but it looks like Zoopla. Actually you might have to take that out.

[00:05:07] Sorry. That takes us stuff from a property platform and then. Turns that into listings for tenants to view. They click on the listing, they view the property, they move in three months later after we've sorted out all the solicitors and surveyors, and then they can live like a homeowner. And it's a way for a renter, someone who, in our experience, on our waiting list, hasn't really experienced housing security Yeah.

[00:05:30] Or control over their home to get those things.

[00:05:34] Gerry Scullion: So when we were chatting in the lead up to the interview I wanted to understand the origins, like the seedlings of the idea. You know, you're, you know, a couple of years probably out of university and I want to understand the journey from finishing university to now.

[00:05:52] Okay, so, you've done some really interesting work there. You've kind of given us an overview of it, but what does that look like when you [00:06:00] finished? So it was at Loughborough, I think I saw that you were in in in the UK. So what does that look like from? You know, Ben, finishing there to now what was the journey and you must have intersected some of the rental market at that point as well.

[00:06:14] Ben Dunn Flores: Quite. So I went to Loughborough University for two years, and then I took a placement here, a year in industry, which everyone in the design school there takes. And then. I was working and really enjoying it, feeling like I was learning loads. And so I came to the conclusion that if I was going to be doing coursework all day, I may as well be paid for it.

[00:06:32] And that was when we were working for the startup in Brussels in the saving water. And that was my first real introduction to working in a startup and also working sort of at this tension between like physical products, digital products, and sort of how do we turn things that are in the world into digital experiences and use those digital experiences to enhance the world.

[00:06:55] So I've never been into this sort of sass for sass's sake. I'm much more [00:07:00] in this We have a problem. We know that we've got this zero marginal cost, infinite distribution mechanism that we can use to solve problems like this. How do we use that solution to map to a real physical problem that we see in the world?

[00:07:13] And then I spent six months there on my internship, came back to London had some caramelized peanuts, as you pointed out from that LinkedIn post introducing and worked for. the construction sector through a startup called Worker Feedback Club. And that was really about, well, figuring out what it was about first.

[00:07:30] And then once we figured out what it was about stopping construction workers from being exploited. And so we went onto site, we did a bunch of surveys and interviews and ways that we could figure out how do people experience their work and how are people in work who might be being exploited without realizing it.

[00:07:49] So we found people who were talking like very complimentarily about their supervisor who was holding their passports for safekeeping and who handled all [00:08:00] the finances for them and who handled where they lived and who actually spoke English unlike them. A few people we had to have translators for and it was a bit of a real eye opening moment for me that We were working opposite a table from people who were in profound workplace exploitation and didn't realize it.

[00:08:20] And part of that is because of the difference in incomes between the UK and the countries that they were from. So they were earning a good wage, they felt. It was just that their supervisor was earning a better one. And then, so we reported that to the supervisors and we realized that there's so much exploitation going on in the construction sector in the UK that we can't go on and do interviews every time.

[00:08:40] Like we need this zero marginal cost infinite distribution system method of tackling that exploitation. So what we designed was a system for workplace communication. Slack for people with low levels of literacy, basically. And. That was when we realized, after trying to sell that for a few months and getting people to use it, doing the [00:09:00] user interviews, standard UX and service design flows, that people didn't really care about the Workplace Construction the Workplace Communications tool as a communication tool.

[00:09:09] They cared about it. because it helped them stay on site longer and because they knew that could pay their rent. Then, unfortunately, last summer the startup failed, we ran out of money and we had to move on. So I moved on to a consultancy for working for the civil service. I worked for the Department for Education and for the Ministry of Justice, as you mentioned, with prisoners, there was, there were two parts of that.

[00:09:32] The first part was working with OMU staff, the Offender Management Unit staff, to calculate how long people should be in prison for. Something that I didn't know and is really scary for me is that stuff is very difficult to calculate because it comes from a variety of different court cases, a variety of different sentences.

[00:09:50] There's variables of everything, and all of that comes from policy documents. And so. It was the role of the technical people in our team to interpret those [00:10:00] policy documents and turn them into code. And what we were doing was kind of on one side, designing the system for very experienced people to use, to turn that into to turn those calculations into like actual readouts.

[00:10:15] And then on the other side, it was working with. Prisoners to figure out how to relay this complex legal information to them in a way that someone who can read very basic sentences, very basic words, but not anything more than that. And

[00:10:32] Gerry Scullion: so with that, like I can see the two roles. that you've called out there really helped prop up your kind of vision for Roost, okay.

[00:10:43] Roost seems to be rooted in the experience that you've gained from both of those by improving the legibility, improving the literation and the, sorry, the tenants who are renting from a landlord, right. There's a level of [00:11:00] exploitation that's happening there as well. It seems to be socially accepted it's okay, well, I'm going to be and we can question that as well.

[00:11:07] It just seems to be like, okay, someone owns it. Someone's making money, but I need a house. I need somewhere to stay. I need somewhere to sleep. So what was your experience? I know you mentioned before, and when you were renting, that there was a bit of a bullying scenario happening with the landlord.

[00:11:22] I'm trying to understand more of the problem space, I guess, and what Roost is trying to tackle. So maybe tell us a little bit more about that.

[00:11:31] Ben Dunn Flores: Okay. So this was when I was working with the construction workers. And so in my personal life, we had a landlord who was bullying us and we were having to pay something that we didn't.

[00:11:42] want to pay and we were assured that we wouldn't have to pay. And kind of at the time working for a startup, money was quite tight for me. So the few hundred pounds that the landlord was demanding to cover an electricity bill over COVID because how come we were in the house all the time was a lot of money for me.

[00:11:58] And so it was wondering [00:12:00] why this landlord could treat us like this. While we were paying his mortgage. So was it a

[00:12:04] Gerry Scullion: fixed bill scenario? Was it like, you know, all the bills were covered and basically due to COVID you were working from home and there was a spike in the

[00:12:12] Ben Dunn Flores: electricity bill? And so he was getting us to pay for it and we were saying no it's included and he was saying well you can go out then and we said okay we'll pay.

[00:12:21] And though I didn't realize it at the time that is not legal. But, I have since looked into the housing the ways that people access housing justice and that is messed up as well, so if there's anyone listening to this that's looking for a side project have a look at how renters access court cases and court documents, and because they are really terrible and there's a big room for...

[00:12:46] for something to improve that. Yeah. But kind of in our situation it was wondering why this guy was treating us like this when we were paying his mortgage and then realizing that there must be a service possible that could allow [00:13:00] a tenant to get a mortgage and then live like a homeowner. Because one of the things that we've since found in our research and in our waiting list is that people don't buy a home to have a massively debt.

[00:13:12] Managed financial assets, they buy a home so that they can't be kicked out so that they have a sense of rent control and so that they can choose the color of the walls. And from a landlord side or from a property manager side, that actually makes it a lot easier to manage these properties at scale because the tenant is doing all the work that requires legibility into the home and the tenants life.

[00:13:32] And so what we were trying to do was can we create a FinTech product that allows a tenant to get a mortgage and then live like a homeowner and then move out whenever they want. In further research into the legal and financial ways to make that happen, we came across housing cooperatives and at the same time we came across these sort of land economics and land justice movements that were informing us that a lot of the problems that we currently experience with the private rental market and with the housing crisis as a whole, Is because of [00:14:00] market and private ownership of land and that land is a substantially different thing from capital and Shouldn't necessarily be subject to market constraints.

[00:14:10] Okay,

[00:14:11] Gerry Scullion: so let me ask a question because I know some people will probably be you know, they may not know what a co op is. So I know in andrew's post he said co ops offer a way forward so Describe what that means, because the typical scenario is, as you've pointed out, landlord buys house off the private market and they may buy it outright, if they're really lucky, or they may have to get a mortgage from a bank, so they have to put a deposit down, say it's a 500, 000 house and they've got 100, 000 down in equity and there's 400, 000 outlaid, so they split that 400, 000 out and it becomes The rent that's going to be paying that mortgage for the next 25 years.

[00:14:57] That's probably a really bad overview [00:15:00] of how it works. But that's what we would probably say called a standard. That's the way it is. There's a landlord. Tenant pays the money to the landlord. The landlord pays it against the mortgage and probably makes some income on it as well. So what is a co-op then using that very bad description that I've just given of the, say, the typical scenario of the rental market in say a England and even in other countries as well.

[00:15:28] Ben Dunn Flores: It's a pretty good description to be honest. Thank you very much. Thank you very much. But a co-op is 150 year old legal model. That does something very clever, which separates the control of an asset from being the financial beneficiary of an asset. So you can have a bunch of people buy and use something, but they, and they can control it however they want.

[00:15:46] But the benefit of that financially doesn't go to them. It is incorporated within this body and goes to future members and to sort of society at large in the future. And that's. Not necessarily useful for a lot of parts of the economy, but it is [00:16:00] very useful for land ownership because kind of land, a location, a GPS coordinate, well, a coordinate only describes one thing, it only describes one place.

[00:16:11] So, and I can get more into this later. Interested, but land can be best described as a cartel, a shared control of a monopoly resource. When you have this kind of shared control of a monopoly resource, the best way to manage that is not IRA market because markets and monopolies don't go together very well.

[00:16:31] The best way to manage that is through having the control and the financial beneficiary separated. And so a cooperative, the way that our co operatives work at least is that we have. Tenant management cooperatives that are responsible for running each home and the only members of those cooperatives are the people who live there So it feels like a homeowner and that lease is from a secondary cooperative which has an asset lock ie the assets must be used for public benefit and Is governed by the cooperatives that it leases to [00:17:00] so the tenants are responsible as individuals for the fixtures and fittings the normal stuff that tenant is responsible for they are responsible as members of the primary cooperative and for the non structural elements of the property, and ultimately they are responsible as members of the secondary cooperative for the freehold interest in the land.

[00:17:18] And this kind of graduated levels of control allows us to have different levels of governance at each level, and that's really useful when we're talking about something as essential as housing. It allows someone to be able to have complete, ultimate control over what their kitchen looks like.

[00:17:34] Much less control over how the proceeds of the land sale and the land rent is used. And so we can devote that to charity or to investment or to redevelopment without that necessarily becoming a part of the private income.

[00:17:50] Gerry Scullion: So I see it as a series of levers or levers, depending on where you're saying it, and the traditional kind of process of a [00:18:00] person being the landlord and owning the asset at the end of the term, that's pretty traditional, whereas what you're doing at the moment is you're playing with the flexibility and giving people the outcomes that they want in terms of being able to alter the look and feel, probably not the structural foundations and, you know, knocking walls down and stuff like that.

[00:18:20] Ben Dunn Flores: Where

[00:18:20] Gerry Scullion: else in the world are you referencing for case studies on places that do it better? Because I know in the Netherlands, they have other models that, and it's always the Dutch. We always come back to the Dutch. We gotta love them. But maybe I'd love to know a bit more about your kind of, where to point your finger at and say, they're doing it, they're doing it, they're not

[00:18:45] Ben Dunn Flores: doing it.

[00:18:45] What does that look like? So the environment for cooperatives is actually better in most of continental Europe. One of the reasons why we're not starting there is because they've pretty much solved this problem.

[00:18:57] Germany's

[00:18:57] Gerry Scullion: got a very good way. German people are going to go, yeah why [00:19:00] wouldn't you?

[00:19:01] Ben Dunn Flores: Exactly. No We were in Berlin a couple of months ago because my co founder's girlfriend lives in Berlin and telling about it at parties and sort of, just very briefly. And when we talk about it in the UK, people go, Oh, wow.

[00:19:11] I really want to use that. That sounds like a brilliant idea. When we were in Germany, people go cool. Okay. Yeah. Like why isn't the state doing that? And we've got the same question. So. Yeah.

[00:19:22] Gerry Scullion: Why isn't the state doing that? Like why are Ireland and England anchored in this 150 years, did you say 160 years system?

[00:19:32] Like who and what needs to change?

[00:19:37] Ben Dunn Flores: Okay. So, the sort of real answer is that in the 2000s, well, from the late 90s through to 2020s, through both governments reigns, they realized that productivity growth wasn't improving in the UK and that they wanted to give people a feeling of progress, of increasing wealth and their primary.

[00:19:59] voter group [00:20:00] is generally older people. So the way that you give people a sense of increasing wealth without growing productivity is through two ways. One is through immigration, because even if per capita incomes aren't going up, the whole economy is going up and sort of rising tide lifts some boats.

[00:20:15] And the second is through effectively rent seeking. So the government has instituted numerous policies to deliberately increase the value of land and because most of their voting group are landowners, i. e. homeowners, that has been really good for them. So including my parents and including most people's parents, I believe, they've done really well out of their house prices going up from sort of the late 90s all the way to kind of last year.

[00:20:40] But that's paper wealth. It's not wealth that's based on anything necessarily. For example, if you own a pin factory, that makes more pins, and then the pins are themselves useful. If you own land, you cannot use that land ownership to make more land. It's it plays with our economic [00:21:00] intuitions, because we've got this asset that is wealth, but is not capital.

[00:21:05] And we don't have very many of those. So. It's something that, that generates an income because of rent, but it does not generate more capital. It is a a win lose, a zero sum game. The renter pays the landlord and the landlord keeps the money. Not like, if I buy pins from someone, I am giving them money, but I'm getting a pin that I can use for my own economic activity to do something else.

[00:21:27] And so that's why Starmer is talking about this mortgage time bomb. The way of talking about that in an economic context is that they funneled money through easier debt, low mortgage restrictions planning constraints, and a number of other policies, including some tax policies like zero capital gains tax on home ownership.

[00:21:46] And they funneled. all of this money into land values, which has been really good for people over the age of about 50. It's really bad for people kind of my age and millennials and Gen Z, [00:22:00] because we're now in a situation where we can't buy a home because it's too expensive and mortgage rates have now gone up.

[00:22:05] And we can't rent a home because the value of that land is so high. And Kind of what's going to happen now is what has to happen is that land values are going to come down significantly Especially in the southeastern London, so it's going to be really painful for a lot of people, but we have two options We either keep these values permanently high and they permanently become a drag on our economy about 60 percent of the UK's national asset base is Locational land values, which is not productive

[00:22:38] Gerry Scullion: It's really eye opening when you start thinking about how the systems are structured to favour the wealthy. And also favour the people who are, you know, a little bit older. What it looks like for, you know, people who are just starting to find their feet coming out of university

[00:22:53] I mean, renting in London must just be crazy [00:23:00] expensive at the moment. Do you know what the facts and figures are around what it would cost to rent, say a two bed apartment or two bed flat, as you say in London. What are those costs at the moment for someone who's just coming outta university?

[00:23:17] Ben Dunn Flores: It's 800 per bedroom per month in Islington, so about 1, 600. And that is the lowest that you're probably going to get for a two bedroom flat.

[00:23:26] My friends are paying 3, 600, not including bills, for a three bed flat in West Hampstead. So it's that kind of order of magnitude. In terms of our competitors, we've got a number of indirect competitors the shared ownership schemes give people control and security and and a much lower barrier to entry than traditional home ownership.

[00:23:47] There's a bunch of private landlords, many of them who are actually very good at that being landlords. There's some new companies like Uncle or Livvy that are trying to. Create better sense of renting. There [00:24:00] are co living companies like The Collective who are trying to create this kind of student accommodation, but for rich professions type vibe.

[00:24:07] And then we've got some people in the co op space. We've got Radical Roots and the Co op Development Hubs. Yeah, that are trying to make more co-ops set up. They've got a very different approach to us. Our approach is hide all the complexity. Just give people a good home. Yeah. Their approach is much more, it's community led.

[00:24:24] We give you the options. We give you support into setting up your own thing. And so ours is standardized. Theirs is very customized, and so we feel like we're the mass market proposition. And they're the position, they're the proposition for people who really care about the cooperatives and about the co op law and about how they finance it themselves.

[00:24:40] So we're trying to just hide all of that complexity from our users.

[00:24:44] Gerry Scullion: So are banks ultimately one of the people that are going to feel the pinch if you had 10 million people in the UK decide to use co ops to access homes? Or will it? Avoid any of [00:25:00] those scenarios, like who ultimately owns the asset at the end

[00:25:04] Ben Dunn Flores: of the day.

[00:25:06] So the asset is owned by the cooperative, we are using bank mortgages. Roost

[00:25:10] Gerry Scullion: is the cooperative in this instance, or the group of people are you the middle person who's trying to enable the co op to happen, or are you the owner of the asset at the end of the

[00:25:20] Ben Dunn Flores: day? We're enablers. We don't have any properties on our balance sheet.

[00:25:25] Okay. We leave that all in the housing cooperative. So how

[00:25:28] Gerry Scullion: would, how would Roost make money? So that's the question that people are kind of saying. Okay, cool. This looks good. It scales, you know, we, we've probably all, everyone listening will probably say, Ben seems like a really cool dude. Knows his stuff.

[00:25:41] Has had some good experience, but we want to kind of understand a little bit more. So. Roost basically sort of de complexes or un I can't even speak today, Ben. They simplify the process of accessing the money. Is that right? [00:26:00]

[00:26:00] Ben Dunn Flores: And we charge 10 percent of the rent. Really simple. Yeah. And we have people willing to pay that to be able to live like this.

[00:26:07] Because they're not paying 10 percent of the rent to automate a couple of contracts. They're paying 10 percent of the rent. to be their own landlord. And so we found this scenario that is relatively easy for us to implement at scale, but that gives people a lot more value. So standard startup economics.

[00:26:23] Gerry Scullion: So let's think in terms of service design and even say a standard experience map. Okay. Like what would it look like for I'm going to pick two names, Ben and Andrew. Who've co founders of Roost, folks. I'll put links in the show notes, you can check them out when we're talking. Ben and Andrew have had bad experiences renting, they had a bully of a landlord.

[00:26:47] There's this alternate world. Okay, so they're like, okay, they hear this podcast, they want to check out Roost, they go to the website. They sign up and they've found a property. [00:27:00] That's my Google Home doing my fire detection stuff. Nicely timed, Google. So what happens then? So they know about Roost.

[00:27:09] There's two people involved. They've found a property that's in Islington. What does it look

[00:27:14] Ben Dunn Flores: like? So now that we've closed our investment round and we can pay our API providers, they go to our website. Yes. Gotta love. They go to our website. They put in how many people, what rent they want to pay each month, whether they've got anything from, for a deposit, because that's our most expensive form of capital, so it can reduce the rent quite a lot, and where they're looking to buy, and then they click go, then they get a page of listings with the amount of rent that they will pay to live in that property, and what we do is we take house listings, And we put those into our platform, do a very simple calculation on them to work out how much rent they would be paying and filter out the ones that wouldn't be suitable for various reasons.

[00:27:58] And so when they can [00:28:00] click on that listing, it's as though they were using any other property listing website. They can book a tour of the property. Go in, see whether they like it. If they like it, then they fill out a quick form as though they were renters, passport details, right to rent checks, et cetera.

[00:28:14] And then they leave it with us for about three months. Unfortunately, it is still buying a house. So we have to go through all of the palaver of buying a house and. That means that we've got to get the solicitors in, the surveyors in, we've got to get everything to line up and we might have to negotiate on a certain few things.

[00:28:34] So those listings aren't

[00:28:35] Gerry Scullion: rental listings, they're properties for sale.

[00:28:38] Ben Dunn Flores: Properties for sale. All of them. Yeah.

[00:28:41] Gerry Scullion: And that's the difference. So people are, you know, it's entering into a world of like, Oh. Could I live here for X amount of years? So what does that look like when Ben and Andrew who are the people who are looking to find a place to live, they they find a property, the [00:29:00] three months pass, do they have to stay there for an infinite amount of time, or what is that term?

[00:29:07] Ben Dunn Flores: So they have to stay there for a year at the start, and then they have a contract that has a two month break clause. But what we do is that we have the contract between the primary cooperative and secondary cooperative, i. e. the tenant management cooperative and the cooperative that owns the freehold, and that is a really long lease.

[00:29:26] That is a five year lease that renews every midnight so it's effectively a lease with a five year break clause. And then we have a very, a different lease. It's called a license to occupy between the primary co octave and the tenants. And so these tenants aren't sort of legally speaking tenants.

[00:29:41] They are residents or members. I use the term tenants because it's a little bit easier. But those members have. A shorter contract, they can leave after two months and the cooperative has been responsible for paying the rent. So if they can find someone else, brilliant. If they can't, then they have to pay that from the [00:30:00] reserves of the cooperatives.

[00:30:00] And it means they can do a bit less maintenance in the future, but that's how we cover our backs. But yeah, they can leave after two months or stay for the rest of their lives.

[00:30:08] Gerry Scullion: Wow. Okay. Like, I'm literally kind of processing all this information. You're kind of taking my brain out this morning and shaking it.

[00:30:17] So what happens in that scenario? And these are probably questions that people will be having. What does it look like if say there's a flood? In the house. Okay, so say something that's quite, I think it's, that's an act of God is what the insurance companies would refer to it as or force majeure.

[00:30:35] Not sure, sure which one it is, but, there's a flood in the property,

[00:30:40] Ben Dunn Flores: Who do they contact? So we've got sort of a plans A through E to deal with that. So first one is insurance and then second one is that tenants devote 10 percent to maintenance each month. They can spend that however they like.[00:31:00]

[00:31:00] Third one is they devote 10 percent to the co op reserves every month that goes to the big secondary co op. And that owns a variety of houses. So if one of them goes, then because of the portfolio and because it's got multiple 10 percent from reserves, it has the resources to be able to address that.

[00:31:17] And then beyond that, well, the responsibility has to be with the freeholder. That's legally speaking, the freeholder responsibilities cannot be passed on to any other agent. And so that cooperative Unfortunately, we might have the decision between selling the flooded property or being able to do it up with the reserves.

[00:31:35] But we do have those sort of numerous backup plans to make that as safe as a landlord. A landlord has responsibility over the state of the property. And if the property floods, they have the options between doing it up or selling it. And the insurance won't pay for it, of course.

[00:31:51] Gerry Scullion: Okay, so you mentioned there that Ben and Andrew, who are the tenants in this experience map, and not the [00:32:00] co founders of Roost, just I've complicated it by giving the two same names, they pay 10 percent of the rent.

[00:32:06] So you mentioned there, I think it was West Hamstead's 3, 600 a month for a three bed apartment. So they pay 10 percent each month, is it, for accessing that house? Well,

[00:32:20] Ben Dunn Flores: the renting at the beginning is market rate because of the cost of debt. Interest rates at 5 percent mean that we do need to charge market rate rents right now.

[00:32:28] And we need to have HMOs, i. e. people, multiple people living in a flat share rather than... Okay,

[00:32:34] Gerry Scullion: so they pay 3, 600 a month as standard, that's what will be listed. Yeah. And they pay 10 percent on top of that, is it?

[00:32:43] Ben Dunn Flores: No, 10 percent below that. 10 percent below that? So they pay a mortgage that might be 2500 and then...

[00:32:50] Sort of 250 on maintenance, 250 in reserves and 250 as our fee for a roost. So those [00:33:00] aren't accurate numbers. Please don't hold me to that.

[00:33:01] Gerry Scullion: Oh no, yeah. I don't think anyone's going to be listening to it, can you go on. He said 200, no, we're literally just trying to get our heads around it because my modeling, I've only lived in countries like Australia.

[00:33:15] Ireland, I've never lived in the UK, but those models are pretty similar, like, you know, you rent, you pay your money, it's gone, okay, like you just, every month you pay it and it's an outlay, you never get anything back on that money with this scenario of those two people who are going through a roost and they have it, after 15 years they've lived in it, what rights do they have to the property at the very end?

[00:33:39] Say it's 25 year term on the property. Can they walk away from that? Do they have any equity to pull back out of the house or what does that

[00:33:49] Ben Dunn Flores: look like? So we have designed the model to be able to give them equity if we need to and have to. We then had two things that meant that we are not doing that at the moment.

[00:33:59] So the [00:34:00] first thing is interest rates being so high. We can't afford to give tenants equity at the moment and pay all of the debt that we've got to pay and all of the investor, all of the stuff to investors. The other one is that people didn't seem to care that much. When we were doing user interviews, we got lots of questions about the control and the security.

[00:34:18] We got very few questions about. the financial beneficiaries of it. So people care much more about the experience and about not being able to be kicked out because after all it is a lot better than renting. And what we're trying to do is better renting, not worse home ownership.

[00:34:33] Gerry Scullion: Yeah. So you're giving people maybe 80 percent of the benefits of owning.

[00:34:40] Through a similar model to renting,

[00:34:43] Ben Dunn Flores: So we're allowing renters to live like homeowners. Yeah, which

[00:34:47] Gerry Scullion: is which is really empowering like, you know, so what does it look like? Well, what are the risks for roost at this stage because you know, it's early you're A year old, what are the [00:35:00] risks associated with the startup and what can people do apart from connecting with you on LinkedIn and signing up and registering interest and telling people about it?

[00:35:11] Ben Dunn Flores: What can we do to help? Brilliant. So the primary risks are how do we get the money in and we would love to do this community ownership stuff. But if interest rates hit six and a half percent by March, as people are talking about, we're not going to be able to afford to buy properties and have them done using this model that we're talking about.

[00:35:31] We're going to have to do something slightly different, sort of empowering in the tenant run side, i. e. tenants sort of have the control and security over their home, but much less good in the land economic side and the perpetual affordability and future, future state of this. So there's a risk to the mission and a risk to the finances.

[00:35:49] And our role as running the startup is to navigate the two. And of course we will have to compromise the mission before we compromise the finances, unfortunately, otherwise we [00:36:00] don't get to ever do the mission. So the biggest risk at the moment is not being able to get any money for homes. And not being able to create an investable proposition because of the state of things that are outside our control.

[00:36:12] And that is not a good place to be. That is somewhere where I don't think we designed the business very well, but it doesn't look like there's a way around that. It's the same way as the rest of the real estate world works. You need

[00:36:22] Gerry Scullion: investment effectively. You need investment from. Someone or something what does that look like where you get the investment from like, there's, I know we have investors listening to this podcast because I've emailed a couple and they've emailed me but what does that look like in terms of selecting that investor?

[00:36:41] Because there's probably, I know from listening to your background, that person or that thing is really important. To align to the mission.

[00:36:51] Ben Dunn Flores: So we've just closed a hundred K angel round where we're still leaving that open for people with really good CVS and people with value at, and we'd love to [00:37:00] get more people on, especially more people from the property and financial sectors.

[00:37:05] We're also looking for investors in the property itself. And that is something that. Yeah, we're finding quite a rare thing because property investors tend to be sort of very profit driven. They don't tend to be social investors. So we're looking for a social property investor, people who can see the long term mission, the benefits, tenants, the social value that we're providing, but also want to make a small profit because we're not trying to do social housing.

[00:37:29] We can't we. So subsidized housing requires a subsidy and unless someone listening to this is from the city of London or something like that and is willing to take a chance on us and give us some massive subsidies, well, we're not going to be able to do that. So the best we're hoping for is for social investors and real estate investors who are willing to invest in the long term.

[00:37:51] We're chatting to the existing housing cooperatives, sort of briefly. They have about 80 million across London in excess reserves, i. e. reserves [00:38:00] over four years of turnover. So this is stuff that they can't deploy and won't deploy for ages.

[00:38:04] And that's currently sitting in zero interest accounts. So we're trying to get money from them. We're trying to get money from the large institution investors where I've been to a number of property lunches type things and trying to get. From little real estate firms that are willing to do something new and interesting.

[00:38:19] But in terms of what the listeners could do, what listeners could help with, if anyone is or knows angel investors in the specifically real estate and real estate financing worlds, we would be very interested in chatting to them and to be honest. 1k or 2k tickets, we're not necessarily interested in their money, we're interested in them having some skin in the game to help us out

[00:38:45] Gerry Scullion: over the 2k tickets, what does that mean?

[00:38:47] Ben Dunn Flores: As in, we don't care necessarily about the size of their investment, we don't want them for their money, we want them for... their advice, people who are very experienced in the real estate [00:39:00] space. We have people in the financial space, in the charity space, in the sort of homelessness space. We have sort of people all around this sector, but we don't have someone who's core in real estate.

[00:39:10] Gerry Scullion: Okay. So in terms of the amount of equity that's needed to really give it its best shot, do you have a figure that you're looking to

[00:39:19] Ben Dunn Flores: raise? Well, as I say, we've already raised a hundred K that's enough to tide us over for six months. And then, so right now we're looking to raise interesting people rather than raising them in six months time.

[00:39:33] When some of our SES, SEIS stuff comes to you, we then are looking to do a precede. And at that point we'll need probably about 500 K we're and then. Or maybe a little bit more would allow us to do more stuff. Yeah, is

[00:39:47] Gerry Scullion: there an opportunity there? Because I love the fact that co op, I've learned an awful lot about co op.

[00:39:53] Is there an opportunity for you know, crowd equity to, to become an option where, you know, there's [00:40:00] people out there that are saying, okay, like, I'd like to invest in it, but at a micro level. So five hundred to a thousand I know some businesses have done that quite nicely. Actually, the platform that you're using here at the moment, Zencaster, they actually raised they raised a couple of million and they did it through that, like, so other podcasters can invest and have a sort of share within the platform.

[00:40:23] Ben Dunn Flores: Yeah we'd love to. For us, it is... The disc, the discount of doing it by the crowd method versus the amount of money we can raise through that. We don't want to get distracted from the core mission, but we are interested in using platforms like FX and maybe some of the startup specific platforms, but we're looking more at the co op specific platforms for now.

[00:40:43] Gerry Scullion: Ben, look, it's been really eye opening and you know, because I'm privileged and I'm, I say that like, you know, you know, hand on heart, you know, I have a house. I own, we've got a mortgage and all of this situation, but. [00:41:00] I've learned an awful lot about this, and for someone, and I don't mean this in any sort of disrespect, but someone who is so smart and so early you know, like in your mid twenties, I think, probably from just gauging your LinkedIn, you are a remarkable person, okay?

[00:41:17] I literally messaged Lou down, one of my friends, and I went, you need to speak to this person. This person is, you know, you're, there's something going on here, like, folks. It's, it is pretty, pretty incredible to hear you speak about this stuff. So, if anyone is listening to the podcast, I'm going to put a link to Ben on LinkedIn.

[00:41:34] Try and help him, try and share that. I know Andrew had a post that went viral, hence for how we connected. But try and get involved because, you know, if this works in the UK, it could work in Ireland potentially, hopefully. And it's great to have these systems. To really challenge the conventional systems that we've just accepted and somewhat need to question an awful lot further.

[00:41:58] So, [00:42:00] again, I've really appreciated you coming on and speaking to me and listening to me ask some probably very naive questions. So, if people want to reach out to you, I'll put the LinkedIn in there. What other channels do you want people to connect with you on? Now's the time to give it a shout out.

[00:42:17] Ben Dunn Flores: Twitter at Ben Dunflores and LinkedIn work best for me.

[00:42:21] But thank you. Just a brief anecdote to leave. Lou Downs book was what got me into service design in the first place. Wow, there you

[00:42:27] Gerry Scullion: go. Lou, you're probably listening. So there you go. Fans over here, fans over there, fans everywhere. Ben, thanks so much for your time. I really enjoyed speaking to you today.

[00:42:37] It's

[00:42:37] Ben Dunn Flores: been brilliant. Looking forward to it. Thanks. Bye.

[00:42:43] Gerry Scullion: There you go, folks. I hope you enjoyed that episode. And if you enjoyed it and want to listen to more, why not visit thisishcd. com where you can learn more about what we're up to and also explore our courses whilst you're there. Thanks again for listening.

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