For too many people, home ownership is a distant dream. In today’s Britain, only about 27 per cent of people aged 25 to 34 own their home — a huge dip compared to 1990, when ownership for this age group was 50 per cent, according to the Resolution Foundation.
Sky-high property prices, the need to save large deposits, and onerous affordability criteria are just some of the obstacles to home ownership. To properly solve this crisis, we simply have to build houses — something that all the major political parties pledged to do during the election. But the lack of housing supply is not the only barrier.
Thankfully, a raft of startups have emerged in recent years that are trying to tackle some of the other issues using technology. City A.M. spoke to three such companies — Habito, Nested, and Reliable Surveyors — about how they are reforming the industry.
In some ways, there’s never been a better time to get a mortgage. Interest rates remain low, while greater competition in the finance sector means cheaper products for borrowers.
However, the mortgage application process remains confusing and obtuse. This isn’t just an issue for first-time buyers — those who already own a home and fail to remortgage when their fixed-term deal ends could be paying hundreds of pounds more than they need to by staying on their provider’s standard variable rate.
“Our research tells us that 55 per cent of mortgage holders could save nearly £300 a month by switching their mortgage,” says Daniel Hegarty, chief executive and founder of online mortgage broker Habito.
“In an age where animated meerkats are encouraging us to switch our energy and water providers to save £50 a month, too many of us still are unaware that, by slipping onto unfavourable interest rates, households are paying to the tune of almost £4,000 a year into the pockets of the lenders, unnecessarily.”
Habito launched in 2015 with the aim of streamlining the mortgage application process. By keeping everything online and using live chat to get help from the company’s advisers, customers are able to sign up and get qualified advice on their mortgage at nearly any time of the week, rather than having to take time off work to visit a mortgage provider in person or spend hours on the phone.
Last year, Habito launched its own mortgage products, helping to cut the time for customers between completing an application and receiving a mortgage offer.
“We’re also taking a stand on jargon,” adds Hegarty. “We’ve removed all jargon from our website and recently became the only mortgage lender to be awarded the ‘Clear and Simple’ mark for our mortgage terms and conditions from Fairer Finance, meaning that they have a reading age of just 11 years old versus the industry average of 18.”
By cutting down the paperwork and making mortgages easier to understand, Habito is helping to streamline the process of buying a home.
Buying a home is the single biggest purchase that most of us will make. So we want as much information as possible on the state of a property in order to make the right decision.
That’s why property surveyance is so essential, but the industry has failed to innovate or push boundaries, says Ray Harriot, chief executive and founder of Reliable Surveyors.
“It’s important to adapt with the times, accept and implement technology advances, and always put the customer first,” he argues.
One way Harriot’s firm is doing that is through the use of drones to provide customers with an aerial survey as an additional service.
“A typical surveyor will examine your property inside and out, but are limited by a law only allowing them to climb three metres on a ladder,” he explains. “Our drones allow us to examine the nooks and crannies of a property, getting to places ordinary surveyors can’t. We’re also looking into thermal imaging technology in order to identify additional issues, such as dampness.”
By adopting new technology, survey reports can be produced with greater accuracy and more information, which should help prospective buyers make better choices.
On the estate
Moving home is so costly, complex, and in some cases risky that many people are put off trying at all, even when they need to.
Elderly people who don’t downsize from houses that are bigger than they need means that families can’t move into larger homes, which in turn leads to fewer small properties becoming available to first-time buyers. The lack of places coming onto the market can deter people from selling their home, leading to a self-reinforcing trend.
Matt Robinson, chief executive and founder of online estate agency Nested, argues that the estate agent industry is partly to blame, as it has failed to make the process of buying and selling any easier.
“The process is old-fashioned,” he warns. “The prospect of broken chains and a complex legal process only add to the worry when moving home. All of this leaves sellers prone to uncertainty and open to potentially devastating fall-throughs. Ultimately, sellers don’t see much — if any — added value from their estate agent.”
Robinson argues that traditional estate agents only help homeowners find a buyer, but fail to assist with the rest of the purchase. Nested takes a different approach, which Robinson describes as being a “moving agent”.
“This means that not only do we find you a buyer, but we help you to find your new home and negotiate a better price, then make sure that the chain is managed until completion,” he explains. “We also pioneered the chain-breaking cash advance, enabling movers to buy before they sell. This helps to give them that peace of mind that their new home doesn’t slip through their fingers.”
It bears repeating that the fundamental issue of the property market is that we need to build more homes. But that doesn’t mean we should let the rest of the sector off the hook. We must look for ways to make the process of securing a home easier, more efficient, and less time-consuming. These companies have found innovative ways to improve the process. Let’s hope that others follow.
Main image credit: Getty