Giles Mackay: Hometrack founder’s new “iBuyer” UPSTIX could be housing’s Cazoo moment

As he discusses on this property podcast, UPSTIX could do for housing what Cazoo has done for second-hand cars.

You can listen to this podcast via Apple Podcasts or Spotify or SoundCloud or listen to it through the player below:

Giles Mackay would either be most British people’s best ever dinner party guest, or their worst, depending on how their property is faring. This is because Mackay has been predicting house prices with ridiculously high levels of accuracy for over two decades. And five years after he sold Hometrack, a residential real estate valuation platform, to Zoopla for a reported £120 million, the serial entrepreneur is back.

“The case for UPSTIX is open and shut,” he declares, still very much the energetic property pioneer who trained originally as a barrister. “It is about offering sellers a choice that helps them close a sale quickly, giving them certainty and offering a level of transparency and professionalism which perhaps hasn’t always existed.”

The concept of iBuying – short for ‘instant buying’ – is pretty straightforward. iBuyers like UPSTIX introduce choice and speed for those who need to offload a home quickly and with certainty that the transaction goes through, such as in cases of divorce, probate or debt.

According to Zoopla, the average time taken to complete a home sale increased from 90 days to 115 days last year, but in some cases the sales process can take months. Mackay estimates a quarter of the UK’s 800,000 annual home sales have a need to transact quickly, and that the resulting market could be worth £20 billion.

The speed and ease of the sale is offset by a discount – which sits at around four percent when taking into account agency fees and other costs associated with a traditional sale. By democratising home selling, UPSTIX is offering consumers choice where there was none before. Where UPSTIX customers do not accept the valuation, the company introduces them to local estate agents to sell the home traditionally. There is no obligation for anyone to accept UPSTIX’s offer after appraisal.

Underpinning UPSTIX, however, is Mackay’s 40-year career as a serial entrepreneur which has delivered across almost every area of real estate.

Mackay dove headfirst into setting up his first company, Homesearch – essentially Rightmove before the internet – in 1982. He describes jumping into the business world as a “kamikaze model” – a risky move compared to his peers starting out in law or finance. Two decades later, it would lead him into the big time with Hometrack.

“Some of the genesis of Hometrack was actually with PXS,” Mackay explains, referring to his next foray, a part exchange business established in 1998 – a business popular with volume housebuilders before Government policies like Help to Buy underpinned the market. “The most expensive part of the part exchange transaction was valuation,” he continues, “and Hometrack’s computer-aided valuation model was a relatively cheap way of putting a highly-accurate valuation on a property.”

These automated valuation models – or AVMs – are computer programs that use statistical modelling in combination with existing databases to calculate real estate values. Because of Mackay’s work, they are now a ubiquitous part of the industry. “In 2022, 94 percent of UK banks use a Hometrack AVM. It’s a part of the landscape,” Mackay adds.

Following the sale of Hometrack, Mackay established Outra, an analytics platform that goes beyond just valuation to accurately gauge demand for residential units. Describing how it’s becoming increasingly popular with brands wishing to target all kinds of consumers, he explains: “The model is 40 percent real estate, 60 percent demographic data, and we predict when a consumer is going to do something. In the case of UPSTIX, it’s about whether they might buy or sell a house. But there are no limits.”

The other critical puzzle piece in Mackay’s business empire is heylo, the UK’s largest private investor in shared ownership housing. With more than 8,500 party-buy, part-rent homes under management, the firm is arguably generating as much – if not more – social value as many listed companies.

To put things in perspective, Grainger has 9,000 operational rented homes and has been around for 100 years, while heylo – which counts former Grainger director Nick Jopling and former L&G boss David Montague among its advisors – was set up in 2014.

“Tackling the problem of affordability is something that, for most firms, is just too difficult,” Mackay explains. “Shared ownership is clearly misunderstood but it undoubtedly makes it easier for first time buyers to get on the property ladder,” he adds.

“A shared ownership product is like having a very calm partner in the home who never visits the property. You treat the home exactly as your own. There’s no real difference to having a mortgage.”

The success of the model is evident: heylo now commands the UK’s largest shared ownership portfolio and is in more postcodes than any other provider, according to Mackay. Major institutional investors like M&G Real Estate are now entering the shared ownership arena, while other giants like Legal & General have also established affordable housing arms. “What took them so long?” Mackay jokes.

It’s clear that this financing model – giving first-time-buyers a leg up on the property ladder and actually making homes more affordable – needs to play a bigger role in central policy if the government is serious about its ‘levelling up’ agenda. For Mackay, the benefits are obvious: “It’s the lowest cost form of ownership on the marketplace.”

Although the withdrawal of Help to Buy will make it tougher for the government to meet its ambitious housing targets, the good news for Mackay is that with investors queuing up to back UPSTIX he may soon be known not just as a proptech pioneer but as the father of “Help to Sell”.

You can listen to this podcast via Apple Podcasts or Spotify or SoundCloud or listen to it through the player above.