London-based real estate debt investment manager, ARA Venn has closed a deal valued up to £280 million that will be used to invest in first-time buyers' home financing plans originating with StrideUp, a co-owned ARA Venn brand. The goal is to provide buyers with an attractive alternative to the UK Government’s ‘Help to Buy’ equity loan programme that is slated to close new applications on the 31st of October of this year.
Getting a leg up on the property ladder, particularly in the UK has never been an easy feat. However, looking at Halifax’s First Time Buyer review for 2021, a report that shows average first-time buyer deposits have risen 16 percent in two years to £53,935.
Couple this with record 9% inflation, soaring house prices, and the dream of ending the rent and beginning the mortgage seems nothing short of a miracle for many would-be owners.
And this is where StrideUp steps in. Previously backed by Pincus Capital, the startup offers potential homeowners a unique shared ownership mortgage; first-time buyers need only put down a 10% deposit to purchase a property in conjunction with StrideUp. According to the startup, this gives borrowers a purchasing power six and a half times their income, a figure up from an industry-standard four and a half times.
Should would-be buyers find themselves in a better financial situation, they can purchase up to 80% of the property in question outright, and ‘rent’ the remainder via StrideUp until they are ready to purchase more of the property. The advantage here is that the remaining 20% is frozen at the purchase price, meaning even if the value of to property rises, owners only pay what they would have paid at the time of purchase, and, any losses incurred, should the value decrease are shared with StrideUp.
“StrideUp’s mission is to build a more affordable and accessible way for first-time buyers to get on the housing ladder and that has never been more relevant. With surging house prices and constraints on traditional mortgage lending, deposits are often falling short, and at the same time people are spending more on rent and living costs,” commented StrideUp co-founder and CEO Sakeeb Zaman. “With this new funding deal, StrideUp is uniquely positioned to offer a genuine alternative. We’re excited to be partnering with investors who share our vision of building a fairer and more accessible housing market.”