As these schemes have developed and matured, the dividing lines between them and the mass market has become increasingly blurred.
Much of this has been good news. For example, social housing has become far more integrated into new developments and new communities.
But lines have become blurred between those who need help and support and those making their decisions out of choice. The equity share market is a good example.
In addition to the changes to existing solutions, new products have appeared on the market. NewBuy uses an alternative scheme to support lending at higher loans to value. At the same time, we have also seen the emergence of Community Land Trusts (CLTs) aligned to the localism agenda and aimed at providing sustainable and affordable housing developments on a local scale.
A CLT is a non-profit, community-based organisation, run by volunteers that develops housing at affordable levels for long-term community benefit.
By separating the value of the building from the land it stands on, CLTs offer an alternative route through which homes can be created and sold affordably, without the need to deliver a profit at any point in the process. It is not just a rural model, given that only last month, the Mayor of London, Boris Johnson, signed a deal to develop a large urban CLT in London.
Lenders can provide grants and loans to those wishing to set up and develop a CLT in their local area (repayable on completion) and provide mortgages when the properties come to be sold at the end of the scheme.
Schemes also need to be fully developed with the needs of the lending and customer in mind. Care needs to be taken to ensure the model is robust not just when this goes well, but also when the risks that are associated with home ownership crystallise as well.
Listening to lenders at the beginning of the development of schemes can save significant problems later on in the process.
Of course it is not just lenders, but the regulators that need to be engaged as well. The focus of the MMR is clearly on the use of mortgages to buy a home, and schemes that result in ownership of a part share of a home simply do not fit the model well – not least because that all important exit strategy may not be certain at the time when the home is purchased. This matter remains unresolved.
Andrew Baddeley-Chappell is head of specialist lending and divisional policy and governance at Nationwide
