By John Reynolds on Thursday 3 March 2022
Will Rice, CEO and co-founder of Generation Home, talks Tom Blomfield, taking on high-street lenders on price, and further disruption of the housing market.
“I wouldn’t say that he’s Monzofied Generation Home but he has certainly played a really important role in helping me in my management of the company,” says the CEO of husband and wife-founded proptech Generation Home.
Blomfield was said to be blown away by Generation Home’s proposition of allowing mum and dad to be on the mortgage of first-time house buyers, enabling them to borrow more money.
Blomfield, also an investor in the proptech, in a short space of time has not only become an important sounding board for Generation Home but also a mentor-like figure for Rice and the proptech’s 100-strong staff.
Rice says it is “extremely valuable” to draw on someone who has “been there, done that”.
“Tom is the one person on our board who comes from a founder and CEO background,” he says.
“And so a lot of time I spend with him is focused on getting his wisdom around lots of the nitty-gritty operational challenges that we’re working through.
“He goes very deep into the weeds with us, which is great. He brings an extremely analytical frame of mind to the problems that we face and is a great sounding board.”
Blomfield has also been “very generous” in connecting Generation Home staff with mentors of their own, says Sophia Guy-White, the American wife of Rice, who co-founded the lender in 2020 and now has the jazzy-sounding job title of head of customer success.
Generation Home launched on the back of the couple’s frustrations at getting a mortgage.
After returning to London from working in Moscow in 2018, the Russian literature-loving couple were struck by the fact that they’d spent a decade renting with nothing to show for it.
According to a recent English Housing survey, the average renter in the UK spends 35 per cent of their income on rent compared with 18 per cent for homeowners paying a mortgage.
The couple considered buying a home with a group of friends, but high-street banks wouldn’t lend to their group.
They realised that mortgages were inflexible and, though neither had entrepreneurial ambitions, they saw an opportunity to improve the home-buying journey for millions locked out of homeownership.
The couple, both in their early 30s, took the money intended for the deposit on their home and got to work on building a business.
Fast-forward less than 18 months and the FCA-authorised lender, whose backers also include billionaire VC Peter Thiel, has just raised £1bn in debt financing, funds which will be used to lend to more first-time buyers.
Staff numbers have jumped from over 30 to around 100 in a year and now the couple have the lofty ambition of wanting to own the entire home buyer’s end-to-end journey. A major marketing offensive is also planned.
Currently, Generation Home’s two main products (or “features” as Rice calls them), an Income Booster and Deposit Booster mortgage, primarily targeting first-time buyers to finance their dream moves.
The Income Booster mortgage allows a third party, often parents, to be listed on the mortgage, helping the first-time buyer borrow more money.
The Deposit Booster mortgage allows a friend or family member to provide first-time buyers with an interest-free loan to help fund the deposit in return for a stake in the property.
“The typical customer that we see at Generation Home is your normal first-time buyer aged between 25 and 35, purchasing with the support of one or more of their parents,” says Rice.
The lender, which markets its mortgages through social media, is already lending tens of millions of pounds every month to first-time buyers, despite it only making its first loan in 2020.
Rice says: “I think the mortgage industry is crying out for change. But I also think that really the challenge goes quite far beyond mortgages and home financing alone.”
He points to “weaknesses” in many parts of the housing market and believes a flurry of customer-centric proptechs will sprout up looking to topple an antiquated home buying industry.
In its bid to offer a broader sell, Generation Home is rolling out a conveyancing proposition this year and also plans to launch products that will put Generation Home “directly in the mix on price with your key high-street lenders”.
A suite of shared ownership mortgages is also in the pipeline.
At the moment, its rates are not the cheapest on the market, but first-time buyers are unlikely to qualify for the best buys and Rice says the proptech wants to “meet or beat” the high-street lenders on price.
The lender offers loans directly to lenders and through up to 30 per cent of mortgage brokers in the market.
The proptech was born during Covid and currently runs a hybrid model, with staff working remotely and in the office.
“There is something really wonderful about having a white-boarding session and everyone sitting down and saying 'ok, how are we going to build this?’" says Guy-White.
In a very short space of time, it seems that Generation Home has undertaken plenty of buildling, as it looks to disrupt the mortgage industry.