As young people in the UK struggle to save enough money for a deposit on their first home, one startup is offering a helping hand of up to £15,000, in exchange for agreeing to rent the property out on Airbnb after the purchase goes through.
Instead of telling millennials to stop buying avocados or Pret sandwiches, Uppie's practical solution is to essentially pre-purchase up to 90 days worth of future Airbnb bookings from first-time buyers, giving them the cash up front to help with a deposit.
The Cheltenham-based startup was founded by two proptech entrepreneurs, George Rawlings and Jonathan Harris, alongside Tim Hammond, an investor who provided the seed funding.
Speaking to Techworld over the phone, Rawlings explained: "Being millennials ourselves, we had an idea to help get first time buyers on the ladder. We saw that the main problem is that damn deposit, so to help people get a foot on the ladder we wanted to try and solve that problem."
Rawlings says he lists his one-bed property in Cheltenham on Airbnb all of the time, and brings in more than £8,000 a year as a result thanks to the area's vibrant social calendar, so he saw future bookings on the home renting platform as a way to help buyers with that final monetary hurdle.
The money is not a loan or a gift but deemed as a wholesale purchase of rental inventory stock. Uppie will then manage the bookings under a service agreement and take what it calls a 'trade rate' to collect a 15-20% margin on future rentals. "We're responsible for then filling the bookings on the days we have bought and we take the risk for any unsold inventory," Rawlings said.
The owner is required to account for this as income to HMRC, but can use the existing £7,500 annual income tax relief, thanks to the UK government's rent a room scheme.
To get started users have to sign up and get pre-approved by a mortgage partner. Users can then search for 'Airbnb appropriate' houses in the given areas and agree on the amount of days the property will be let on Airbnb, and the corresponding amount Uppie will hand over in advance. The money sits in a solicitor's holding account until exchange, much like a gift from a family member would.
Airbnb provides a predictive pricing calendar for its users, so Uppie can immediately identify the best days to list the property over the next year and then provide this back to users once their home purchase has gone through so they can tweak it according to their availability.
Eventually Uppie wants to be able to provide users with a way of searching for their first home on a map view according to their suitability as Airbnb rentals. So preferable locations or properties within budget with a spare room, for example. Rawlings says their team of three developers are currently working on this kind of functionality by combining data from Airbnb's own API and house prices from Zoopla's API.
Uppie is currently only available in Cheltenham with Bristol, Edinburgh, Bath, and Southampton set to join in 2018. "Uppie’s rollout will be in towns and cities where Airbnb income has been proven and there is significant first-time buyer appetite," Rawlings explained.