In the UK today, qualified under-35s are struggling to own a home because saving independently for an adequate deposit has proven too hard for too long.
Compounding this, the gap between wage growth and the rise in property prices grows ever larger. On one hand, the average earnings per week have risen by just £39, or barely 8%, over the last five years. Whereas, the September 2016 Halifax House Price Index shows the average UK property price has risen by 10% in just one year. The result is a generation stuck across a chasm. As the Economist reported, 46% of 25 to 34 year olds lived in private rented accommodation in 2014-5, nearly double the 24% of a decade earlier. A new approach is needed to overcome the challenge.
StepLadder is a UK peer-to-peer platform set to launch a distinctive proposition: the platform will facilitate the formation of screened, matched cohorts of prospective first-time home buyers into circles. The key difference between this lending circle and a traditional savings plan is that, whilst the monthly sums will be the same amount, a StepLadder member has the chance of getting the property deposit much sooner and, therefore, onto the property ladder.
StepLadder circles are a collaborative proposition that turns qualified prospective buyers’ monthly payments into property deposits for each circle member to draw and utilize. As a result, members reduce the average the time to purchase their own home by 45%. After screening, matching and on-boarding, the circle members are introduced to each other and a new community emerges. As a result, StepLadder circles can revolutionise first-time buying by empowering individuals together.
This is facilitated by a “host” dedicated to the circle and its members. From StepLadder’s proprietary survey, nearly 80% first time home buyers have savings reserved for a deposit. However, fewer than half have given much thought to a savings plan or calculated their ultimate buying power. Though a significant milestone, purchasing a first home is often an opaque and hidden-cost-laden experience. Today, in a £1+ trillion market, seven out of eight UK mortgages are arranged through independent advisors and brokers.
Access to specialist property buying resources and a commitment to information sharing are designed to be key elements of Stepladder’s service.
The insight underpinning StepLadder is that despite having a highly sophisticated financial services industry, regulated, scalable Rotating Savings and Credit Associations (ROSCAs) are absent from the UK market. StepLadder is setting out to restore opportunity for prospective first-time home buyers using a financial solution that has been tried and tested worldwide, but new to Britain. Today, the target market – thanks to the explosion of social networks and peer-to-peer lending – has never been more receptive to a collaborative financial proposition. Results from over a dozen focus groups run by StepLadder confirm not just an overwhelming interest in the proposition but an appreciation of the proposed ecosystem benefits – group discounts, community, and the feeling of “someone on my side.”
