As government schemes are closing to first time buyers, it could fall to the prop tech industry to help them find their way home.
Property brochures are packed with smiling fresh-faced buyers, invariably enjoying a cup of tea in their new home. First Time Buyers were out in force in 2019, revelling in slowing property prices, growing wages and a spate of competitive mortgages.
However, a decisive election result in December has stoked the housing market. With the Help to Buy scheme facing demolition and the price of starter homes rising three times faster than the wider market, the poster children of the new homes industry are in danger of becoming a much rarer breed.
Furthermore, Britain’s outmoded home-buying process can make the property ladder look a little rusty to those who grew up in the digital age. Mountainous deposits are also deterring First Time Buyers from crossing the threshold to homeownership. According to a recent survey by Engen Group, one in four people who do not own their own home have no interest in doing so.
GOING DIGITAL
Prop tech companies are increasingly turning their attention to disillusioned First Time Buyers. Companies such as Wayhome are touting alternatives to traditional mortgages, while startups such as Track, which launched in December, are geared towards helping First Time Buyers manage their finances.
In October, Proportunity raised a £2m seed investment to grow its analytics and lending platform, which uses artificial intelligence (AI) to crunch data and offer home equity loans to First Time Buyers.
The London-based fintech company has styled itself as the only challenger to Help to Buy, a scheme which supports nearly half of some housebuilders’ sales.
“Homeownership figures are in freefall,” said the company’s founder and CEO, Vadim Toader. “Proportunity is a tech-driven mortgage lender that helps first-time buyers get on the property ladder by removing their biggest barrier to homeownership – large down payments.”
AI-powered mortgages could also go a long way towards convincing nervous First Time Buyers that they are putting their precious cash in the right place. “The extra edge really comes from our machine learning-powered real-estate analytics engine that helps buyers cherry pick property gems, i.e. homes worth 20-30% more than their asking price, from the thousands of new listings skimmed through every day,” said Toader.
INSTANT MORTGAGES
Proportunity is far from the only prop tech company trying to reboot mortgages for digitally-inclined First Time Buyers. Coadjute, a network for decentralised workflow and data sharing within the property industry, recently agreed a project to develop new mortgage technology with a consortium of property software providers and banks, including NatWest. Ultimately, the goal is to complete the entire homebuying process via an app.
“Getting a mortgage and moving home is a slow, complex and confusing process with buyers having to knit together services from multiple businesses,” said John Reynolds, CEO and Founder of Coadjute. “This is a particularly daunting task for First Time Buyers who, by definition, have had limited exposure to the processes involved – the challenges of which can sometimes dissuade the uninitiated from even starting the home buying journey.”
A recent study by Santander laid bare just how bewildering First Time Buyers can find buying a home, with 62% believing that ‘exchange’ referred to swapping keys on moving day. “From our reviews the process of buying – what they need for a mortgage, surveyor, lawyer, timeline – is still confusing,” said Rory Cramer, Co Founder of Home Views, a review platform for new developments. “The language of service charges, leases and stamp duty is new.”
CUTTING THE CONFUSION
By soldering the many strands of the housing market together, blockchain technology can cut the time it takes to buy a property – along with the costs and confusion.
In January, instant property purchases came a click closer, as Yourkeys completed the first fully digitised end-to-end property transaction in just 11 days, compared to the industry average of 63 days.
Yourkeys CEO, Riccardo Iannucci-Dawson, said: “The problem is that there are lots of companies involved in each transaction and their systems don’t talk to each other. We saw the opportunity to build a data layer that pulls together inputs from everyone involved in the process.”
No mean feat, when you consider that there are thousands of legal firms and financial advisors nationally. “This was a huge challenge but working with our partners, we achieved it and now have over 2,500 companies directly integrated into the platform,” Iannucci-Dawson added.
The technology pulls together over 200 data sets from multiple sources, condensing the process of buying a home for a generation who grew up with one-click ordering and same-day delivery.
TECHNICAL SUPPORT
While cold hard data may put a First Time Buyer’s mind at rest, the heart takes more convincing. For property newbies, the emotional side of buying a first home can be overwhelming. According the Cramer, the best people to tempt First Time Buyers through the door is other First Time Buyers.
“We get a lot of reviews from first time buyers who say they were nervous to buy having heard so many scare stories in the press,” Cramer said. “They are looking for independent trustworthy information to help them when making a decision on who to buy with and what questions to ask.”
The words of someone who is already through the door of their first property can be an invaluable source of information, and comfort, to an anxious First Time Buyer.
“One of the biggest decisions we ever make, financially and emotionally, is choosing a home,” said Cramer. “Our mission at HomeViews is to share useful, trustworthy insights about residential developments to support those making that decision.”
Britain’s creaky home-buying process may seem otherworldly to those who came of age in an instant culture. However, with the right technical support, First Time Buyers might find that home is closer than they think.
