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The bank has invested in a start-up that aims to help renters become home owners.
Commonwealth Bank’s start-up incubator x15ventures has joined a $31 million funding round led by Square Peg for rent-to-own start-up OwnHome.
The start-up provides a potential pathway to home ownership for those who are able to afford regular mortgage payments but not necessarily a deposit.
OwnHome said it helps individuals overcome the “deposit hurdle” by buying a property for them in OwnHome’s name and letting them move in by paying an upfront fee.
After making monthly payments to build up a deposit over three to seven years, the customer is then able to put this deposit towards buying the home at a pre-agreed price.
“Housing affordability is a challenge for many Australians, particularly young people and their families,” said x15 managing director Toby Norton-Smith.
“We believe OwnHome will provide an alternative path to home ownership, particularly for first home buyers who are responsible savers but aren’t able to rely on the bank of mum and dad for help with the deposit.”
X15 has taken a “minority investment” in OwnHome as part of the Series A funding round alongside contributions from existing investors, including Global Founders Capital, Entrée Capital, AfterWork, and Possible Ventures.
The start-up’s co-founders James Bowe and Tim Harley had previously received $150,000 as winners of x15’s Xccelerate 2020 venture program.
“This is a particularly satisfying investment to make, given we’ve worked with the OwnHome team since they first founded and launched with the support of our Xccelerate program, and because our strategic VC partner SquarePeg is leading the round,” said Mr Norton-Smith.
CBA said that OwnHome joined a number of other investments made through x15 to “complement and expand” on its home-buying business, including free credit score provider Credit Savvy and upcoming digital home loan product Unloan.
“As Australia’s largest lender to first homebuyers, innovating and improving the home buying journey is the cornerstone of what we are doing to help our customers and today’s investment in OwnHome will provide greater choice to those who dream of home ownership but seek a different route to the traditional rent-and-save approach,” said CBA’s group executive for retail banking services Angus Sullivan.
There are currently more than 3,500 applicants on OwnHome’s waitlist, and the company plans to buy 200 homes for approved customers in the next two years.
“As we scale and shape the model in Australia we will continue to benefit significantly from the support of like-minded partners in CBA and x15, who share our mission to help more people on the road to home ownership,” said OwnHome co-founder James Bowe.
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