Ben Leonard, CEO and Co-founder, FirstHomeCoach
Purchasing a property. It’s a key life goal that so many Millennials aspire to – yet one that, in recent years, has become frustratingly unachievable.
The statistics around first-time home ownership make stark reading: just a decade ago, home ownership amongst 25-35 year olds was 35% higher whilst today only 30% of social tenants believe they will be able to own a home. The chances of owning a home in the UK have more than halved over the past 20 years, and the average age of a first-time buyer is now 30.
We also know from our research that, even for those that can afford to buy a home, purchasing a property is one of the most complex, prolonged, fragmented and stressful processes to navigate. It’s one that involves numerous products, services and dealings with various professionals – all of whom have their own agenda and interests, most of which first-time buyers don’t fully understand.
Something must change. Young people need more support, a structured framework, and ultimately greater empowerment. A key part of this, we believe, lies in their data.
Data collection, and the subsequent analytics and processing to build a profile of a buyer, is nothing new in the property world. But for too long this data has primarily served the benefit of the agent or platform, not the buyer.
To truly help young people realise their aspirations on the property ladder, we – as an industry – need a reimagined approach to data: a model that services the end user. A model that uses data to help people help themselves.
Firstly, we need to ensure our profile of each potential buyer is as hyper-personalised as possible, whilst using as limited an amount of data as possible to find a better balance of privacy and personalisation
No two potential property buyers are the same, and everyone needs to be understood on an individual basis, rather than placed in generic segments, bands or profiling groups, as if often the case. At FirstHomeCoach we provide people with a bespoke plan allowing them to quickly see how to realise their ambition and then adjust their plans accordingly, all without asking for a name, address or email.
Secondly, the ways in which we utilise personal data must be more transparent and responsible. We need to remember that this data belongs to the individual not the firm and it is being provided to us for a particular reason.
Following the Snowden, Cambridge Analytica and Facebook exposes, consumer trust in organisations to ethically process our data for our benefit is at an all-time low and big data has today for consumers become synonymous with targeted advertising, surveillance and intrusion.
At FirstHomeCoach any data entry is fully explained and is only processed to provide the buyer with specific requested feedback or a clear benefit. For instance, we ask for Date of Birth to establish if a consumer can apply for a Lifetime ISA, not to target them with gaming console adverts. We ask for your salary details so we can assess if a shared ownership mortgage could be a suitable product, not to offer holidays to the Bahamas.
We also aspire to re-use as much data as possible where we introduce buyers to relevant partners. Working with the wider industry on this is a key ambition and technologies like APIs and Digital Identities provide us all with a real opportunity to make the entire experience of home buying better.
Thirdly, as we move into an era of open data, we must do much more to demonstrate how consented data, when utilised responsibly and transparently, can be used to empower and benefit a buyer.
Take Open Banking for example – a secure way for consumers to share their bank data with third parties. Last year we were asked by HM Treasury to develop a system that, using Open Banking, enables renters to share their rental payment data with a credit rating agency, thereby improving their credit prospects.
In the case of home ownership, having a thin credit file can be just as large a hurdle to securing a mortgage as having a poor credit file. The consented, transparent and responsible use of data in this instance can therefore tangibly improve the prospects of young people hoping to buy a home.
Open Banking and the sharing of consented data can also make the process of saving for and purchasing a property far less cumbersome. From tools to support budgeting through to identifying better savings rates and undertaking mortgage affordability assessments, Open Banking has the potential to inform, educate and streamline the home buying journey.
The reality is however that the vast majority of buyers don’t want to talk about their data or the merits of Open Banking. To win back their trust, we must establish new systems and engagement methods that – rather than taking advantage of naivety – use transparency and design to demonstrate that their data can assist them in achieving their life goals. Doing so, as an industry, will be a major step towards empowering young buyers to take their first home ownership step.
This isn’t a first for professional services and a big personal inspiration in our industry is TransferWise. They are proud about being ruthlessly transparent, committed to explaining their business model and always working to benefit the consumers’ interests. If changing currency can be made this good, then why not home buying?