Nationwide has invested in a rent-to-own start-up as part of a move to help first-time buyers who are unable to access typical mortgages get onto the property ladder.

The building society said its investment in start-up, Kettel Homes, forms part of its efforts to help its members with the rising cost of living.

With a minimum deposit of 2%, Kettel enables first-time buyers to live in the home they want to own while they “build up their deposit, strengthen credit and increase affordability”. The price of the property is locked in at the outset so that tenants have a clear route to homeownership.

Nationwide has put £2.5m into an incubator specifically designed to encourage platforms, such as Kettel, by bringing together start-up businesses with innovators, organisations and charities. Kettel also works with institutional property investors to purchase the properties, which are single-family homes bought for between £125,000 and £400,000 outside of London, and then uses its platform to manage the entire process.

By fixing their rent, savings and future purchase price from the beginning, Kettel’s service sets out a roadmap for first-time buyers to achieve their goal of homeownership within three years – ensuring the price of the property does not increase over time. Those using the service are asked to save a 10% deposit and will be given a standard repayment mortgage as they transition from renting to owning.

Nationwide chief strategy and sustainability officer, Claire Tracey, commented: “Our Incubator is bringing together innovators, charities, organisations and experts to help tackle the effects of poverty. It is more important than ever that we act now, given the rising cost of living.

“The fact is many individuals who are struggling financially have to pay more for the same goods and services. More needs to be done to make things fairer for those who have the least means. But these are not easy issues to solve and require a truly collaborative, cross-sector effort.

“Through providing meaningful support alongside funding, we are looking to help transform the lives of those living in poverty through scaling long-term solutions to help tackle the challenges this presents.”

Kettel Homes CEO and co-founder, Trevor Stunden, added: “Generation rent has become a requirement versus an option for most millennials and gen z. We are setting out to change that by using a blended model to help give aspirational first-time buyers the structure they need to get their foot on the ladder.

“Our goal is to expand homeownership to people who couldn’t otherwise get access to traditional home financing at the moment. The long-term benefits of homeownership for both the individual and society are clear and makes for stronger families and communities.”

The service has launched exclusively for first-time buyers in Birmingham, Coventry, Leicester and surrounding areas, with the first home purchases now underway. It is expanding to other cities across the Midlands and the North over the next two years.

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