Nationwide has invested in Kettel Homes, a rent-to-own startup helping first-time buyers unable to access typical mortgages by saving a slice of their rent to build the deposit.
The size of the investment has not been disclosed but Nationwide - which is Britain's biggest building society - has put £2.5 million into an incubator specifically designed to encourage platforms such as Kettel.
With a minimum deposit of two per cent, Kettel works with customers to purchase the home they want to own and rent it back to them at market rates while they save their deposit, build their credit score and enhance their affordability.
It 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.
The startup claims that by fixing their rent, savings and future purchase price from the beginning, it sets out a roadmap for first-time buyers to achieve their goal of homeownership within 36 months - 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. If the customer decides not to purchase, they still get to keep their accrued savings minus a relisting fee. The customer has the option stay on renting the property.
The firm has launched in Birmingham, Coventry, Leicester and the surrounding areas, and is expanding to other cities across the Midlands and North over the next 24 months.