OwnHome – which purchases a property for high-credit customers without a deposit and allows them to build purchase credit while they live in that property – has announced that it has moved its first customer into their own home.
The start-up – which launched three months ago – has seen partners Beau Fraser and Lance Purvis become outright owners of a two-bedroom town house in Surry Hills, Sydney.
OwnHome buys a property for a customer and owns the title to the home, but allows the customer to move into the home immediately. Customers make monthly payments to OwnHome that are equivalent to the traditional method of renting and saving for a deposit for that same home (while benefitting from capital gains of the property).
The arrangement enables the customer to purchase the property off OwnHome in three to seven years at a pre-arranged price, with a minimum lease commitment of two years.
They can live in the OwnHome home for up to five years before they must purchase it for themselves.
Commenting on securing a home for its first clients, OwnHome co-founder Tim Harley said that seeing Mr Fraser and Mr Purvis move into their home has further fuelled the company’s desire to assist Millennials with stepping on to the property ladder.
“Beau and Lance are the first of 400 customers we hope will move into their dream homes in the next 18 months,” Mr Harley said.
“Since launching, the applications have come in thick and fast. OwnHome is the only rent-to-own model that provides a path to home ownership in the area you want to live that doesn’t require hundreds of thousands of dollars for a deposit.”
Historically low interest rates, pent-up demand, and government incentives have contributed to surging house prices across Sydney, with median house prices climbing by 26.0 per cent to $1.4 million in 2021 and forecast to rise to over $1.54 million in 2022 (requiring a deposit of more than $260,000).
As such, Mr Fraser said: “Traditional paths to home ownership are broken. It takes 10 years longer to save a deposit than it did 50 years ago. Millions of Australians, mostly our generation, are stuck in the rent cycle. We just want to level the playing field.
“Our parents live in country New South Wales so moving home to save wasn’t practical. Most of our friends are in the same predicament, desperate to buy but unable to save enough in the face of soaring prices and stagnant wages.”
OwnHome secured funding from Commonwealth Bank of Australia-owned x15 ventures in November last year after winning x15ventures’ fast-tracked program, Xccelerate 2020.
The program aims to fund and support the growth of start-up companies, including by leveraging CBA’s group assets and strategic partners.
[Related: CBA-owned fintech backs home buying start-up]
Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.