How Generation Home is revolutionising the market for first-time buyers

Everyone wants a dream home. But nearly everyone needs a hefty mortgage to pay for it. So what happens when you struggle to pay for the mortgage on your own? If you’re lucky, you can have a whip-round among your relatives. Or, like Will Rice and Sophia Guy-White, you can come up with your own dynamic mortgage platform that accommodates a whole bunch of different ways of sticking a mortgage together.

Will and Sophia first met in London. She grew up in Connecticut and had studied Russian at Columbia in New York. Will hails from Putney. He read Russian and Arabic at Cambridge and wooed Sophia with quotes from Pushkin. It wasn’t long before they found themselves in Moscow, for a five-year period topped and tailed by the 2014 Sochi Winter Olympics and the 2018 World Cup. While Sophia worked for the Moscow Times, covering the Crimean crisis and the ongoing conflict with Ukraine, Will was running public market investments for the chairman of Aeroflot, one-time deputy chief of staff to Putin in the St Petersburg administration of the 1990s.

But when they returned to London in their late twenties they came down to earth with a bump. They had been renting for 10 years and had nothing to show for it. They tried buying a house with friends, as you might rent one, and discovered they couldn’t make it work. Which is when Generation Home was born. In early 2020, just before Covid kicked in, they moved into an office on Exmouth Market. At that point they employed twenty people. Now they employ almost 100, have leased a second floor, raised £30m in equity funding, and expect to “at least double” over the course of this year.

“We’re trying to have a systemic impact,” Will says. “We want to change the way in which wealth is distributed, to create a country in which every individual can build wealth in the home they live in.” He concedes that as visions go, this is ambitious, but it helps to have “a clear north star”. “We need to reach a scale that can turn round some headline statistics that we care about: how many people in the UK own a home of their own.”

In the short term they are revolutionising the way houses are bought and sold. It isn’t so much altruism as frustration. Only 29 per cent of 25- to 34-year-olds currently own a home. Generation Home is focused on smarter ways for first-time buyers to borrow and leverage family wealth.

“The customer only cares about one thing: buying a house,” Will says. “Success is very simple. It’s you moving into the house you want to buy. But you have to navigate this fragmented ecosystem of different service providers to get there, all of whom have distinct interests that are not aligned with yours. This leads to detrimental outcomes for many customers and an inefficient housing market. To make home ownership accessible to all, we need to not just solve the way homes are financed, but the way they are marketed, bought and sold, and owned.”

Back in 2019, then operating out of co-working spaces, Will and Sophia began by opening a conversation with their potential market on Instagram, with a view to understanding “customer pain points”. There was a lot of pain out there, and they got a lot of feedback. What would-be buyers needed most of all, they concluded, was a “point person”, a role now fulfilled by Generation Home’s “customer champions”. “They need someone that’s going to hold their hand through the whole process,” Sophia explains. “So often the pain points are black boxes. They don’t understand, they haven’t done it before, there are all these peaks and troughs of stress along the way, where they’re being chased by different people all telling them different things.” Most people don’t know what underwriting is, Will adds, or what the word conveyancing means, until they run into it in real life.

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That hand-holding is facilitated by the efficient use of new technology. “We’ve built software that covers the entire home-buying process. We operate off our own system in an industry that’s littered with legacy platforms. We’ve built everything in-house around the customer.” There is more scope for self-service, which helps to introduce transparency where previously there was opacity. “Our software allows the customer to see what and why at every step of the way.”

But Generation Home offers more than just enhanced customer service. Many first-time buyers fall into one of two categories: not enough deposit, or not enough income. “Often they can’t quite afford what they want, and they’re coming with a family member, or a sibling or friend, or they’re self-employed and have a slightly unusual income, and they’ve been hitting the wall of computer-says-no.” Rather than close the door on such applicants, Generation Home starts by asking constructive questions: what is your situation, what is your support network, and how can we configure this to make it work?

Their income and deposit booster products, and their home agreement, all allow people to harness family (or other) support in mutually beneficial ways. You can own part of a home, along with your partner and your mother, for example, and have that ownership change as your situation changes: how much of it you own at any given moment adjusts dynamically based on your financial contribution. All parties build equity, with the split reflecting their respective investment, and Generation Home has devised a legal framework that sits on top of the existing structure provided by the Land Registry and allows each person to track their fractional interest in the home in real time.

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The beauty of this is that it eliminates the dilemma whereby parents face trading off their own financial security in favour of the financial security of their children. The Generation Home deposit booster is essentially “DIY help-to-buy”, allowing the BOMAD (bank of mum and dad) to boost the deposit without stamp duty consequences on either side. Their income booster allows mum (or dad) to boost available income in the short term with the flexibility to release her once she’s played her part. “Mum doesn’t need to be in it for the life of the loan. She can simply be on standby to help, or chip in however much she wants a month, but any payment she makes builds equity for her, and she’ll have her own stake.”

Progress has been swift. Will and Sophia began as relative novices, with only their own experience for context. Then came the product development phase on social media before they were authorised by the FCA. Generation Home got its first customers into homes in October 2020 and in August 2021 extended their offer to intermediaries via the Legal & General Mortgage Club, giving them access to around 20 per cent of the broker market. By summer they expect to move into the top twenty lenders in the country.

One of the greatest pleasures, Sophia says, is the number of their employees who have bought a house since joining the company. “Every time you get a notification that someone has moved into their new home, that’s the really exciting bit, that’s what you want to focus on.”

The Generation Home mission statement of making everyone a homeowner is not a flippant one. “We want to ensure that everyone has a financial stake in the society they live in,” Will says. “Homeownership is not only a major engine of wealth creation, but also an investment in your community.”

@drheathermartin