Malaysian co-living startup Hom responds to fraud allegations by landlords – Wired PR Lifestyle Story
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Following recent allegations about the conduct of Hom, a Malaysian startup, Vulcan Post has investigated and written this article to shed light on the situation.
In this, we are acting as an impartial party to: mention Hom’s history, recount the alleged incidents that have happened, investigate the allegations, and get Hom’s responses to the allegations.
The purpose of writing this article is to have a platform that showcases both sides of the story. By asking Hom for a response and relaying it in the article, this will enable Hom to explain their stand, and for the affected parties and readers to hold Hom accountable for their actions and future plans outlined.
Disclaimer: Vulcan Post is an impartial party in this situation, and this is not paid content by Hom or any of the affected parties.
Hom’s background & the start of the allegations
Hom (or Capital H Sdn Bhd) is a residential real estate platform offering co-living spaces, launched in July 2020 (during CMCO) by Felix Ferdinand and Bryan Lim.
They aimed to solve two main problems they saw in the real estate market: the rapid rise of property prices across main cities, and to improve conventional rental processes.
According to Felix, many landlords in KLCC and Bukit Bintang were suffering bad rental losses at the time, so Hom jumped into action to help them.
Six months later, Felix and Bryan had grown Hom to about a team of 20 or so. With the increased manpower, they were launching a new venue almost every month.
“However, Hom was stretched a little too thin, and in January 2021, when the government imposed movement restrictions, we never knew that it was leading to the full series of lockdowns [that lasted months],” Felix recalled to Vulcan Post.
“The business verticals that we were operating in were immediately shut down [and put] on pause. No renovation was allowed, no property viewing and renting was allowed.”
This went on for another six months and Hom saw no inflow of cash, and it put its fundraising activities on hold too, Felix said.
Subsequently, this led to financial issues, among others, and recently, it was brought to our attention that there have been several allegations made against Hom.
The person who brought this to our attention via the Entrepreneurs & Startups Malaysia group on Facebook was a landlord, Akram Yusof, who decided to speak up about it.
Note: This matter has since been brought to the police and court by Akram and several other landlords, but an official investigation has yet to be made. Hence, every claim mentioned with regards to Hom’s conduct is still an allegation.
From here on do note that all claims about Hom from external parties are still allegations but we will not be repeating “allegedly” in every instance.
How it started
According to Akram, he had engaged Hom in early 2020 to renovate his unit in Novum, Bangsar South. In total, he invested RM22,737 as 50% deposit for the renovation and subsequent rental management.
After 3 weeks of depositing the money, however, he was told of the issues happening within the company from other landlords and more. Among the issues were incomplete renovations for landlords, and unpaid salaries and EPF to employees.
Since his renovation hadn’t commenced and he was worried about his investment, Akram requested a refund from Hom.
In late February 2021, CEO and co-founder of Hom, Felix Ferdinand, reached out to Akram about his refund, proposing a repayment agreement.
By early March 2021, Hom had made the first round of repayment to Akram, albeit with some delay. In records of the WhatsApp conversation logs between Akram and Felix that were shared with Vulcan Post, Felix told him that other landlords would begin getting their repayments soon too.
But after making the first repayment to Akram, the rest of the agreed repayments began getting delayed for him and other landords. Hom also grew more unresponsive to their follow-ups and questions.
Vulcan Post managed to speak to some other landlords who were willing to share their stories under the condition of anonymity, and they reported facing similar situations with their units in Novum, Sky Suites, and Emporis Kota Damansara.
Brought together by their shared frustrations, Akram and a group of around 30 other landlords began sharing their stories with one another on WhatsApp, sharing evidence and what kinds of legal action they were hoping to take.
This continued for months, with slow progress on Hom’s end in terms of repayments. In November 2021, Akram decided to share his story publicly on the aforementioned Facebook group to ask for advice on what to do next.
He also felt it was necessary to bring his story to light after learning that in August 2021, some landlords with units in Southlink, Bangsar South had engaged Hom and now found themselves in the same boat.
Akram believes that had they known about the month-long struggles other landlords were already having with Hom throughout 2020 and 2021, they would not have engaged the startup.
How it escalated
For many of the landlords, it began with incomplete renovations by Hom. Upon their requests for refunds, Hom then outlined repayment terms and proceeded to begin repaying the owners.
But the owners that Vulcan Post spoke to maintained their statement that repayments slowly stopped coming in after being continuously delayed by Hom.
For some, they were given multiple repayments in the form of cheques, but they bounced.
With regards to Hom’s workplace situation, there were also claims from ex-employees that their salaries, EPF, and SOCSO weren’t being paid. For some, their paid salaries were being deducted, but there were no contributions to their EPF and SOCSO.
During our investigation, we also learnt that several contractors who had worked with Hom are still awaiting outstanding payments.
Some were even willing to give the team the benefit of doubt and accepted several more unit renovations in good faith that they would be fully compensated in the end. At the time, a few repayments were processed.
Eventually, however, they had to cut ties when the agreed payment terms were no longer being honoured by Hom, with the contractors we spoke to claiming that Felix kept delaying the process.
In all, the parties of landlords, ex-employees, and contractors who worked with Hom share several consistent grievances: outstanding payments, delayed repayments, and little to no knowledge on when they could be fully reimbursed.
Hom’s side of the story
After getting more context and evidence for the above claims made by the 3 parties, Vulcan Post then reached out to Felix to clarify these allegations.
Again we’d like to make it clear that it is important for us to share Hom’s responses to understand both sides of the coin, and also so that they can then be held accountable for what actionables they plan to take next to overcome this.
Refunds to landlords
Felix stated that Hom is still currently doing refunds, from renovation to rental deposits. “Up until today, we have refunded up to 40% of the total refunds amount in less than 6 months. It was all done on a case-by-case basis.”
“For some of the partnerships we had with the landlords, we were contributing 30% (or no less than RM18K per unit) of the capital expenditure (CapEx) or renovation and upstart management costs,” he added.
He stated that Hom’s initial business model allowed them to do so to accelerate growth while minimising the cost of investment for landlords.
Furthermore, for affected terminated landlords, Felix claimed that Hom offered an additional 10% on top of the refund as compensation and a damages fee.
So, according to him, Hom is making repayments, but with difficulties due to the current inflow of cash.
While that may be the case (Vulcan Post wasn’t privy to sensitive files from Hom), the startup’s management team appeared to maintain poor communication with landlords, a mistake that Felix himself acknowledged too.
As these issues were unfolding, Hom also deactivated its Facebook page which made matters worse. Any company that takes down its public page while refusing to be wholly transparent with affected clients will be seen as suspicious, as though it has something to hide.
There are better ways for a company to do damage control, whether on its own or through an experienced public relations (PR) team, and unfortunately, Hom did neither.
Regarding employee salaries & contractor payments
Felix clarified that Hom had to let go of some employees based on their efficiency, productivity, and roles at that point in time.
“During those periods, we had an internal financial adjustment, but none of the employees were on furlough nor [were] any salary deductions [made],” he clarified.
“We had a mutual agreement of the salary deferment with additional compensation being stipulated as well. It was all done based on good faith.”
As for the contractors that Hom had worked with, Felix responded that in all of Hom’s engagements and partnerships with third-party vendors, they employed a credit terms agreement.
Dictionary time: Credit terms are terms that indicate when payment is due for sales that are made on credit, possible discounts, and any applicable interest or late payment fees. A credit transaction is when customers are given a period of time after the sale is made to pay the seller.
During our interview, Felix brought up that Hom isn’t the only co-living startup that’s been hard hit in the pandemic, and that these issues aren’t unique to Hom.
While that might be true and we’re sure some similar businesses can empathise, it does not warrant their response (or lack of one) to the affected parties.
Hom’s recovery plans
In Q1 2022, Felix’s plan for Hom is to launch multiple verticals on different asset classes as well as optimised revenue models.
From their current projection as well, he’s confident that they will complete the full refunds before Q2 2022, with compensation and damages fees included.
“We are very positive about the business recovery in 2022, in fact, we are already putting in place the right leadership team with industry veterans of accumulated 40 years of experience,” he told Vulcan Post.
“You are to see a new set of directors be appointed as well as a new CFO from an existing listed company in the industry, as well as the new announcement of the round we are raising from investors.”
Not just the pandemic is to blame
Hom’s case is one of a startup that wanted to provide a win-win situation for all its clients (landlords and tenants), but ultimately, poor management exacerbated by the pandemic’s impact brought about the above issues.
From speaking to Felix, we noted that his stance is that Hom must help itself first before helping its clients (through the completion of repayments). Unfortunately, this stance is at odds with the priorities of the landlords, some of whom reportedly have had to take out bank loans to complete their unit renovations themselves.
Word spreads fast about negative news, and Hom will have a lot of work to do if it wants to rebuild its reputation and regain the trust of landlords and contractors, especially amongst those whom we talked to.
In any case, it is not us that Hom owes explanations to, but to the landlords and other affected parties. It’s understandable for the startup to blame the pandemic for its financial struggles, but its management should have handled communications better with transparency and honesty.
The landlords we spoke to showed that they too tried to exercise compassion and empathy for what Hom was going through. Many of them were willing to give Hom more time for repayments, if the WhatsApp and email records shown to Vulcan Post are of anything to go by.
But it was the continuous delays and broken promises as well as lack of transparency and a clear, communicated repayment plan that drove the landlords to finally publicise their grievances.
Despite this bubble of negativity though, Felix and his team at Hom don’t appear to be giving up anytime soon, though only time will tell if the 2022 plans he outlined will come to fruition.
Featured Image Credit: Hom
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