Start-up company Stepladder is promoting a new way for first-time buyers to save for a house deposit.
As part of the project Stepladder matches savers with other members who have similar goals, which effectively creates a 'circle' of members who pay a fixed amount each month.
It then works on a lottery basis to determine the point at which each member receives the full amount. A computer algorithm selects one of the members to receive the full amount every month until everyone has received their deposit.
For example, Stepladder would bring together 10 people who wanted to save £10,000 each. For 10 months, the 10 people pay in £1,000 to the group pot, leaving the group pot at £10,000 every month and this £10,000 gets awarded to a member on a monthly basis.
According to Stepladder, 87 per cent of members get their deposits faster this way than saving alone and are three times more likely to reach their savings goal.
The firm works as an appointed representative of More Lending Solutions which is regulated by the Financial Conduct Authority for peer to peer lending.
Speaking to FTAdviser, chief executive of Stepladder, Matthew Addison, said he felt the scheme could become successful within the UK.
He said: "It’s peer to peer savings which is a similar principle to how building societies became successful in the UK. It plays on that and people like the community feel.
"Each circle has a host which acts like the old-fashioned branch manager of a building society and will answer queries and help people along their saving journey.
“I think there’s a need for collective finance in general and in the past year, we have seen 10 times the number of people engaging with us at Stepladder and there are 12 times the number of people applying to join Stepladder.”
Lucy Mullins, co-founder of the firm, said Stepladder wanted to support people through their long-term saving journeys.
She said: "Our circle structure is a really great motivator for people to achieve their saving goals. Also, once a member receives their deposit, we can connect them with mortgage brokers and lenders and guide them through the ‘what happens next’ part."
Ms Mullins explained that members would still receive their payments if someone dropped out of the group.
She said: "We built a lot of flexibility into the system because we know people’s situations change.
"If someone wins the deposit, it has to be used to buy a property until everyone has earned their deposit. If someone wants to drop out before they’ve received their deposit, they can get their money back once everyone has received the funds, unless we can find someone to fill their place.
"If someone has been awarded the deposit but has not bought a property, the deposit would be returned to the group as it remains with Stepladder until you buy a property.