London start-up Unmortgage enters £500m deal with AllianzGI

9 Jul 2019391 Views

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Unmortgage aims to help people buy homes without having to fulfil the requirements needed to apply for a traditional mortgage.

Today (9 July), Unmortgage announced a partnership with Allianz Global Investors (AllianzGI) to create a new fund to purchase properties offered through the platform. According to TechCrunch, this fund is worth £500m and while the deal was announced today, it was actually signed at some point last year.

The news comes after Unmortgage’s CEO and co-founder Rayhan Rafiq-Omar left the company in early June.

London-based start-up Unmortgage was set up in 2016, with the objective of helping people buy homes even if there were many obstacles between them and a traditional mortgage.

With the slogan “buy your home gradually, live in it now”, Unmortgage allows customers to purchase a minimum 5pc of a house (this can cost no less than £12,500) as long as they have an income of £30,000 before tax. The remaining percentage (in this case, 95pc) of the house is bought by one of Unmortgage’s funding partners.

The customer then lives under a part-rent, part-own deal, where the rent is determined by average prices in the locality. The percentage that they own is deducted from each month’s rent. For example, if average rent for similar properties in the area was £1,000 per month and the renter owned 10pc of the property, their monthly rent would be £900.

Due to tax laws in the UK, the property can only be bought in increments up to 40pc ownership. After this, the house must be purchased with a mortgage or inheritance. Once a deposit has been made, only 5pc of the house can be purchased per year, either in lump sums or the overpaying of rent.

Compared to renting a property in a more conventional manner, Unmortgage points out that its scheme gives renters the freedom to paint the walls, nail up pictures and fill the property with their own furniture, rather than having to accept whatever furniture a landlord has stocked the house with.

The offer also isn’t limited solely to new build properties, as many other shared ownership schemes are.

Unmortgage released a statement about the partnership with AllianzGI on its site following the announcement. The statement serves as a kind of FAQ page, which explains, “If you buy 5pc of a home, AllianzGI would manage the money that buys the other 95pc.”

Unmortgage goes on to explain why it chose AllianzGI as a partner: “AllianzGI is one of the world’s leading active investment managers. They manage over €535bn in assets for individuals, families and institutions around the world. In return for paying up to 95pc of the home, your monthly rent gives them long-term, secured and stable income streams.”

AllianzGI has yet to release a statement on the partnership.

Kelly Earley is a journalist with Siliconrepublic.com

editorial@siliconrepublic.com