Imagine you’re a single mother, a freelance writer, a dog owner or a new immigrant looking to rent a home. You have income and a solid track record of paying your bills. Nonetheless, your application is repeatedly rejected, because your profile makes landlords nervous.
“We exist in a world where not everyone has equal access to finance,” says Sarah Wernér, co-founder of the fintech company Husmus. “Decisions are made using credit scores, but these are biased, and often inaccurate. It has huge repercussions in peoples’ lives, particularly their ability to put a roof over their heads.”
In 2019, Sarah inherited her childhood house in England and became a landlord, an experience she found as trying as being a tenant. Like other landlords, she gravitated towards tenants with “stable” jobs, such as doctors and lawyers.
“Even as someone who’s aware of the biases of the world,” she recalls, “I found myself making decisions in a biased way, and I thought, ‘Oh my goodness, what is happening? Why are you acting like this?’ And I realised that it’s for financial reasons. People act the way they do out of fear of loss.”
In 2021, Sarah founded Husmus (‘house mouse’ in Swedish), together with her husband Mattias, a technical director from Sweden. It’s an unbiased, tenant-referencing program to give potential reliable tenants an equal chance to find a home.
Seeing the true you
Sarah is a data scientist, and she knew there must be a better way to determine whether an individual would make a reliable tenant.
“I realised that the metrics we pay attention to are very biased in themselves,” says Sarah. “The world has moved forward. The way we earn a living has changed compared to 200 years ago, when financial institutions started using things like credit ratings.”
She thought technology could be put to use to obtain more personalised metrics, such as a person’s rental history, making the overall process fairer.
Using AI and machine learning, Husmus can study the financial behaviour of thousands of individuals in real time. “We are able to see the true you,” says Sarah. “Who you are, without any world lenses colouring our judgement.”
Husmus was a finalist in the European Investment Bank Institute’s 2023 Social Innovation Tournament, which recognises entrepreneurs who are making a social, ethical, or environmental impact.
Goodbye to big deposits and guarantors
Based on its assessments, Husmus proposes a tenant guarantee adapted to each person’s situation. Once covered, a tenant can ask to sign a lease without paying a hefty cash deposit upfront. An estimated £5 billion is currently tied up in UK rental deposit schemes, money that could be put to better use.
“I know tenants who have had to give up buying new shoes for their children in order to save up for the deposit,” says Sarah.
She notes that Husmus also eliminates the need for tenants to find guarantors.
“Sometimes people say: ‘Maybe if you get your mother or father or someone else in your family who’s more well off than you to sign for you, then we’ll rent to you.’ But what if you can’t? What if you’re an orphan? What if you’re new to the country? There are so many reasons you might not be able to produce that. And again that is biased decision-making.”
Benefits for landlords too
Renters are not the only beneficiaries of Husmus’s services. The startup’s AI-based risk assessor helps landlords who are faced with dozens of applications and no efficient way to sift through them.
“You don’t have to stress yourself out with assessing all of these people yourself manually and making those initial decisions,” Sarah says. “We just send you a shortlist, and there you are.”
Husmus’s assessments can reveal details that credit ratings miss; the company has even uncovered identity fraud. One landlord wrote: “Your behavioural assessment is the best thing I've heard. I've rented to people who sounded great on paper and ended up being nightmares who trashed my house. They were doctors.”
Landlords can also sign up for Husmus-recommended insurance that protects them from non-payment of rent or damage to their property. Sarah says this “frees them to be generous and accepting of different lifestyles, and not be so biased in that decision-making.”
An inclusive insurance
Husmus’s model is made possible by the recent embrace by the United Kingdom and the European Union of open banking, which gives customers ownership of their financial data and the right to share it with third parties, such as fintech companies, in order to access new products and services.
The European Union and the United Kingdom have also enacted new regulations to protect consumers, including the most vulnerable, in need of financial services. Husmus’s primary customers are insurance companies, who benefit by insuring tenants that have been carefully vetted.
“We’ve come around at the right time for that legislation,” says Sarah. “Insurance companies can even increase their profitability, because we see beforehand who’s buying the product.”
Husmus’s platform is embedded in a number of real estate listing sites. When a person applies to rent a home, it asks for permission to access their financial data, runs it through the algorithms, and assesses it immediately. Applicants who pass the assessment (and most of them do) receive a rating and an insurance quote. Husmus avoids privacy issues by deleting the data right away.
Social inclusion
In less than three years, Husmus has helped more than 12 000 people obtain housing. Around 26% are “financially marginalised”— for example, they don’t work standard 9-to-5 jobs, or have poor credit ratings, or receive government assistance.
The company expects to assess at least 50 000 people in 2024 (its partnerships give it access to more than 1 million), and to start turning a profit.
Husmus operates solely in the UK for now, but it plans to expand to Germany, France, and the Netherlands by 2026. Sarah says the startup is also planning to move beyond insurance into the banking segment, with AI-driven decision-making on loans and mortgages.
The Husmus model could be applied to a number of sectors that are subject to unfair bias, such as job seeking.
“For now, the dream, the passion is around financial decision-making, so that people can improve their housing situation,” Sarah says. “But there’s no telling where Husmus goes in five to ten years’ time. As long as it stays true to being a social impact company, I will be satisfied.”
