Could the latest proptech lending platforms reshape the housing market?

 

A new form of ‘private Help to Buy’ could be on the cards to help first-time buyers gather their deposits using innovative technology-based platforms, as proptech advancements continue to transform the sector.

First-time buyers struggling to save up enough of a deposit to get onto the property ladder have been helped in recent years by products such as the government-backed Help to Buy scheme, where the government lends you up to 20% of the sale price, while you take out a mortgage on up to 75% of the rest of the property. The loan is repaid on sale of the property, including any capital appreciation in the home’s value, although it can be paid off earlier subject to certain conditions.

In a similar vein, some private start-ups are now looking to introduce a private scheme whereby high-net-worth investors lend money towards first-time buyers’ deposits, which acts as a form of investment to the lender when the value of the property rises, while enabling the buyer to purchase a property they otherwise may not have had access to due to a lack of funding.

Tackling rising house prices

The idea behind one such proptech firm, Propertunity, is to use an artificial intelligence-based platform to analyse data to predict where house values are going to increase in order to make the investors money. The company was launched in December by Vadim Toader as a way of “helping you buy your first home without having to save for 10 years”. It is venture-funded with backing from proptech investor Oliver Samwer, as well as Nested.com’s founder Matt Robinson and property services group JLL.

Another similar start-up, Ahauz, has raised around £2.9m from property investors as well as early-stage investor Forward Partners, and also intends to use this to lend to first-time buyers for their deposits. It was initially set up in response to the difficulty faced by prospective London buyers struggling with rising house prices, and will provide up to 15% of a house’s value as a loan.

Co-founder Karthik Srivats said of the venture: “Getting that first foot on the property ladder has seemed impossible for so many young people in recent times and we hope that we’ll be able to help them bridge that gap, making homeownership realistic for all.”

The property market is continuing to reap the benefits from gains in the proptech sector as technological advancements save industry players time, money and hassle.

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Could the latest proptech lending platforms reshape the housing market?

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