Home Property Finance & InvestmentMortgages New mortgage-free route to home ownership aims to make London affordable again and buyers only need 1% deposit

New mortgage-free route to home ownership aims to make London affordable again and buyers only need 1% deposit

by LLP Finance Reporter
9th Feb 23 4:52 pm

Aiming to disrupt the antiquated mortgage market, Allbricks have launched a new route to home ownership. By unitising investment in residential property – a first in the UK –  Allbricks wants to extend the opportunity to buy a home or invest in property to a whole new generation.

This revolutionary crowdfunding platform enables buyers and investors to co-invest in a home by breaking down the investment into units called ‘bricks’. The home buyer purchases as many bricks as they want (with a minimum value of £10,000 or 1% of the property price, whichever is higher) and investors buy the rest, with stamp duty split proportionally. The buyer pays rent to the investors at market rates on the bricks they don’t own.

Available initially in London with a view to scaling up to the rest of the UK, prospective buyers – whether first timers or moving up the ladder – can potentially afford to buy any home they could afford to rent. Unlike other approaches, Allbricks offers true gradual home ownership as homeowners can buy more bricks over time or buy their home outright.

Allbricks CEO, Shahram Shaida, said: “Mortgages have been helping people into homes since the 12th century, but the world has moved on – we’ve now got outdated systems of lending dragging people down with them. Other solutions have just tinkered with different mortgage levers, but we’ve created a whole new model. The launch of Allbricks today brings a modern alternative, developed over six years, that democratises wealth creation by unitising UK home ownership and property investment.”

Allbricks is available to first-time buyers and home movers as long as they pass the appropriate affordability checks. Home buyers can choose the home they want to crowdfund for and aren’t limited to properties below £500k, new builds or leasehold. As there’s no mortgage and no debt, the home buyer’s purchasing power is based on what they could comfortably afford to rent rather than mortgage-based income multipliers.

Ultimately, the homeowner is in the driving seat. Provided they keep up with monthly payments, they can keep pets and make their own interior design choices (as long as they don’t reduce the home’s value). Once the first investors have owned their bricks for three years, homeowners get the chance to buy 5% of them annually. And the more the homeowner buys, the smaller their rent payment to the investors.

The Allbricks Property Maintenance Programme is also there to help keep homes in great shape. Each property gets a dedicated property manager, buildings insurance, regular gas/electrical safety inspections and an annual repairs budget.

Athena Hubble, previously Commercial Director – Zoopla, MD – CarWow, and advisor to Allbricks, said: “The Allbricks approach is truly innovative and a fresh take on an old problem. Between the time it takes to save for deposits, affordability limits imposed by mortgage providers and now interest rate rises, it’s an almost impossible environment for buyers of all kinds.

“We know it can take over ten years to save for the traditional deposits required by mortgage providers. There are millions of renters or homeowners with 1-4% deposits already saved who will now be free to buy the home of their dreams or move up the property ladder. Allbricks could make the instability of traditional renting a thing of the past and make buying a home in London achievable once again.”

Shahram added: “We’ve written off a generation, casually calling them ‘Generation Rent’, when they still want to own their own home. A system that’s more inclusive, that keeps people in their communities and makes home ownership more accessible is well overdue. My mission is to put the fading dream of home ownership back within reach. By bringing together those who want to own a home and investors who can contribute to that goal, we’re aiming to disrupt a market that has been closed to so many for too long.”

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