Unmortgage, the London-based startup that lets you buy as little as 5% of a home and rent the rest, has announced a partnership with Allianz Global Investors (AllianzGI) to create a new fund to be used to purchase properties offered via the platform.
The AllianzGI-managed fund is targeting a size of £500 million, according to my sources, while I understand that the deal was actually signed mid last year but is only being disclosed today. That’s undoubtedly a clever bit of PR timing as it gives the impression of continued momentum for Unmortgage after founder and CEO Ray Rafiq-Omar departed last month. In other words, Rafiq-Omar was actually the CEO when the AllianzGI deal got across the line.
Founded in 2016, Unmortgage attempts to solve the increasing difficulty first time buyers face trying to get on the housing ladder as rising house prices typically outstrip wages. If people rent, they often cannot save the large deposit required for a mortgage. It is this “vicious circle” that Unmortgage want to break: by helping families that can afford to rent gradually buy a home.
Under the Unmortgage part-own part-rent proposition, renters can purchase as little as 5% of the property they want to live in, without taking out a mortgage, and then rent the rest. Unlike traditional ‘shared ownership’ schemes, the offer isn’t limited to new build properties and tenants can “staircase” (i.e. buy more of the property, thus reduce their rent) whenever they want and by as much or as little as they choose.
Meanwhile, AllianzGI’s fund will enable Unmortgage to purchase its ownership stake of the homes it buys in partnership with renters. In turn, it enables AllianzGI’s institutional investor clients to invest in residential property as an asset class.