Unmortgage offers a socially responsible investment that helps bridge the gap between renting and owning. It is designed to help people with above-median salary (£40k-£120k), who have a significant deposit, but not enough to get the property they want. We believe Unmortgage is the solution to the Government’s quest for secure, long-term tenancies.
The Unmortgage platform offers access to a portfolio of select mid-market family homes in dependable areas generating an inflation-linked net yield of 5%.
These properties are crowdsourced on the open sales market by prospective tenants. Each property is only acquired if it passes our strict Due Diligence process.
Our approach removes the barriers to investing in residential property - sourcing, scalability and security of income - unlocking £4tn of residential property for institutional investors.
Unmortgage tenants are personally invested in maintaining their home. This changes the economics of residential property, through substantially reduced voids, streamlined maintenance costs and lower management overheads.
Our aim is to provide reliable, inflation-linked income alongside dependable capital preservation. Our approach focuses on risk-reduction rather than maximising gains. We use our proprietary dataset of over 70m property listings alongside crowdsourced data to ensure we are buying the top 5% of properties (ranked by value for money).
We target mid-market family homes, in highly desirable areas, with dependable tenants in properties that offer the best value for money. We analyse all of these properties using the four pillars of our risk mitigation framework:
1 People - the most reliable tenants
Unmortgage applicants must have a stable income and must prove they have been reliable tenants in the past. To assess this we carry out 5 layers of checks on each applicant:
- Phone Suitability Interview - we conduct a half hour phone call to ensure that an Unmortgage is more suitable for them than renting or a mortgage
- Employer & Landlord References - we require positive references from both parties
- Rental Affordability Check - we ensure that total monthly payments will be no more than 30% of gross income
- Bank Statement Verification & Credit Check - we use bank statements as proof of income, deposit and current rent; we also perform a detailed credit check on every applicant
- Employment & Income History - we look at past income growth and ensure the applicant is highly employable
2 Place - the top 20% of areas
We look for properties in areas that historically have the lowest capital risk exposure. To do this we only purchase properties in the top 20% of postcodes across the UK - ranked by these criteria:
- Market Volume - we look for areas with high demand as measured by the total number of sales over the past 5 years
- Market Historic Trend - we look for areas that have consistent pricing across the market as measured by variance of capital appreciation across price brackets
- Market Supply vs Demand - we look for areas with a balanced ratio of property listings to completed property transactions
- Average Time On Market - we use our proprietary database to asses how long it takes to sell a property in each area
- Market Sales vs Rental - we look to see if the rental market and sales market display the same patterns, taken from live and historic sales and rental listings
3 Property - the most in-demand properties
We look for the most desirable properties – those which have the largest potential market. To do this we only purchase properties that meet these five criteria:
- Period Property (pre 1920s) - historic outperformance in terms of capital appreciation
- More Spacious Than Average - based on cubic space per person, by property type and area
- Close To Major Transport Links - high-frequency transport is within walking distance
- Property Has Been Well Maintained - there is unlikely to be any major work needed
- Close To Multiple Good Schools - within the catchment area of several schools which have been rated Outstanding or Good by Ofsted
4 Price - the top 5% for value for money
We look for properties that offer the best value for money based on relative yield. As the rental income of a property is reasonably fixed, this is a measure of the return based on the asking price.
- Rent Driven Valuation - we look at the annual rental income for the property ÷ the achievable price
- Independent RICS Valuation - we commission an independent valuation of the property by a RICS accredited surveyor
- Comparable Property Valuation - we look at the asking price compared to other properties recently sold in the area
- Vendor Circumstances & History - we look for favourable vendor circumstances and offer history
- Value For Money - we compare the expected property yield against benchmarks for that property type in that area
Our platform targets a net income of 5.0% p.a. plus direct exposure to the capital growth story of UK residential property. Market data going as far back as 1985 confirms that the risk-adjusted returns of residential property have consistently outperformed commercial. Our process has been designed to source the very best properties available on the residential market, whilst reducing capital risk and improving security of income.
In Q4 2016, we ran a small consumer trial on the back of a single article in The Times. That one article led to over £92m worth of crowdsourced property. Of these properties the returns profile of the portfolio that would have passed our criteria is:
|Trial Platform Performance|
|Historic Capital Growth||8.44%|
|Predicted Capital Growth||4.12%|
|Estimated Total Return||9.18%|
|Asset Management Fee||0.9%|
|Total Net Return||8.28%|
The Unmortgage Platform offers direct investment into UK residential property targeting a net yield in excess of 5%.
Estimated Growth based on 5 Year Growth numbers annualised from JLL Uncharted Territory Report. Management Fee includes 0.1% for maintenance assistance fund
Social Impact - The Missing Step Between Renting And A Mortgage
In the UK there are over 1m households who earn over £40,000 a year and are stuck renting. An Unmortgage is the vehicle we use to help families become homeowners. Unmortgage helps these families get onto the housing ladder whilst reducing their exposure to debt and interest rate movements, creating a more stable housing market.
Unmortgage tenants benefit from all the advantages of homeownership - they can decorate the property they wish and turn it into the home they want. Unmortgage helps families live in the area in which they want to live, while continuing to get closer to a full mortgage.Case study to follow..