Speaking at the CML annual conference, quality assurance test analyst at The Northview Group, Kasar Ayub, proposed the plan to divide existing properties into smaller apartments to both meet the housing shortage crisis and allow older borrowers to downsize without moving.
Ayub suggested a let-to-live mortgage product where lenders worked in conjunction with housing bodies, who would advance funds to jointly purchase the property from the vendor, who then relinquish ownership of the home.
Part of the funds would be used to subdivide the property into two or more flats, with the rest being paid to the vendor to use as they please.
The sum would depend upon the life expectancy of the current homeowners as well as conversion costs and overall house pricing.
Upon death of the vendor, the bank or housing body could sell the property or continue to let out the rooms individually.
Ayub said: “The product is designed for homeowners who want to raise money against the property and downsize without having to move.”
He advised the idea would not suit all property types and would only work in parts of the UK where cross conversion of properties was commercially viable.
Speaking as part of the judging panel, Tracie Pearce, head of mortgages at HSBC, said: “This is a difficult part of the market, which is why it has yet to find a suitable solution for older borrowers.”
She added the idea of dividing houses up into smaller apartments was the best idea as it not only addressed the lack of affordable housing in the country, but also kept older borrowers in the home they felt most comfortable in for the longest amount of time.
