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‘The little guys’ lead lender innovation to fill Help to Buy gap – poll result

  • 25/07/2019
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‘The little guys’ lead lender innovation to fill Help to Buy gap – poll result
An entrepreneurial bunch of lenders have positioned themselves to fill the gap when Help to Buy expires in 2023 by developing solutions with private backers.


The products remain subject to non-disclosure agreements but some shared equity products could be on the market as early as next year.

The solutions have been developed by smaller players who are looking at options as the market contemplates the huge lending gap that will be created when Help to Buy ceases. 

The Help to Buy: Equity Loan scheme has covered £60bn in transaction values since it was first announced in 2013.

However, regulator the Financial Conduct Authority (FCA) is said to have ruled out a proposed bond-style product that could have been used to fund house purchases.


Lender responsibility?


The latest reader poll by Mortgage Solutions showed that 55.4 per cent of brokers answered ‘yes’ when asked: ‘Should lenders be doing more to support shared ownership as a replacement for Help to Buy?’ 

A large minority of 36.9 pet cent said ‘no’ and 7.7 per cent hit ‘don’t know’.

Dale Jannels, managing director at Impact Specialist Finance said that he’d seen “a lot of innovation, just not from the big guys at the moment. A number of different lenders are preparing to launch.”

“They are seeing all the new-builds going up left, right and centre — someone’s got to fund them. When Help to Buy goes we know that first-time buyers are going to be stuffed.

“It’s the little guys, the entrepreneurs, trying to make it work. There are quite a few lenders coming to market, effectively privately funded, to help out on Help to Buy and shared ownership schemes.

“Someone tried doing a bond but it didn’t get through the Financial Conduct Authority. That would have been the ideal scenario but the FCA didn’t like it, so I think that’s been canned,” Jannels said.

“There are lots of crossovers coming for shared ownership and Help to Buy, lots of initiatives on the go.

“It’s going to be a big gap and funders need to get their ducks in a row now because these things can take time to get sorted,” Jannels added.


Multi-stakeholder solutions

However, specialist lender Precise disagreed that the onus was on providers alone to generate solutions.

“This is a wider issue than just lenders,” said Alan Cleary, managing director at Precise Mortgages.

 “Lenders can only offer one part of the solution in solving the problem that will potentially be created when Help to Buy ceases.

“The key is for lenders, house builders and government to work together to smooth the path post-Help to Buy,” he said.

“There are constraints for us. If we were to lend at higher loan to values (LTVs), which is one solution, we have capital issues that we’d have to deal with. The higher the LTV the more capital we have to put against deals based on the regulatory guidelines.

“There are other regulatory hurdles,” Cleary added. 

“If you’re lending more money or even doing shared ownership that may cause affordability to come into the spotlight,” he said.

Help to Buy comprises the schemes Help to Buy: Shared Ownership, Help to Buy: Equity Loan and Help to Buy: ISA.

It’s jointly run by the Treasury and Ministry of Housing, Communities and Local Government and is delivered in partnership with the Homes and Communities Agency and UK Asset Resolution. 

Half a million homes have been bought with assistance from Help to Buy since its launch in 2013.

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