Name: Charles Haresnape
Shared ownership plays a key role in the housing market and offers first-time buyers who are struggling to get on the housing ladder another option, and in some cases the only option. The government’s recent confirmation of £390m to build over 8500 new homes, including properties at affordable prices, also comes as welcome news.
Most lenders still require a large deposit from purchasers and the Homes & Communities Agency estimates that 55% of 18- to 35-year-olds in the private rental sector cannot afford to save for a deposit. While some large lenders offer sharedownership and shared-equity mortgage schemes, many do not, and it is often left to smaller regional lenders to fill the gap.
Research reveals that shared ownership/equity products attract higher interest rates because they tend to be high LTV. We need to see more lender innovation in this sector to help more people into home ownership, thereby helping stimulate the market and the economy. The government’s My Choice HomeBuy scheme was very popular – so much so that it was pulled.
It would seem sensible that government-owned lenders set aside an allocation of funds for the affordable homes sector to help sustain its future. In this way, house builders can plan social housing schemes with confidence.
It is also vital that brokers understand this market and develop in-depth knowledge of the lenders and products available. Building a relationship with HomeBuy agents is also paramount as they access initial eligibility for government schemes.
Name: Phil Coombes
Company: Leeds Building Society
At Leeds Building Society, we are fully committed to helping customers buy their own homes and have offered a shared-ownership mortgage for over a decade.
Shared ownership is highly dependent on government support and, whilst the private sector may be able to increase its presence, it cannot fill the hole that would be left should a lack of funding curtail this niche area.
We are all well aware of the difficulties facing first-time buyers purchasing a home. They can often struggle to meet the full asking price of a property on the open market or their current income is insufficient to support a full mortgage.
With funding available up to 95% of the borrowers share, which is usually 50% of the value of the property, first-time buyers only need to find a small deposit and, with fees assisted products available, shared ownership facilitates the first step onto the housing ladder for many borrowers.
Buyers are then able to staircase up to full homeownership, by purchasing additional shares of the property, as their finances and earning potential increase. Parents and close relatives can also help and act as a guarantor to increase the amount that can be borrowed.
We know from experience that shared ownership products play an important role for many customers in making their first step into the property market. There is no doubt that, with the current state of the housing market, public sector money is critical to meeting the UK’s long-term housing needs.
Name: Andy Frankish
Company: Mortgage Talk
It is clear that although the cuts in the government’s Budget will affect the affordable property market, the importance of this sector on the wider housing market cannot be underestimated. In the recent election all the major parties dedicated large sections of their manifestos
to this particular subject.
If the private sector can fill the potential hole, there is a huge opportunity for business to make a considerable amount of money. The supply of housing is woefully low and demand for it continues to increase. If you are in any doubt of the need for affordable housing, just contact your local council. Traditionally, blue chip companies like insurance companies have been very active in this arena, but when the recession bit, this type of investment was cut.
One option to improve the situation could be for developers of housing stock (the big-name house builders) to work together with local authorities to build more affordable housing. The builder would become the investor by retaining a share. The cashflow implications would be offset by providing new land to the developer at reduced prices in areas that need regeneration, which are then renewed by the developer, thus completing the circle and killing three birds with one stone.
Local government can further assist by reducing the amount of red tape in planning. Niche lenders, like the Leeds, can play a huge part in giving brokers access to more affordable products. All we need to do is change our perception of what an affordable housing customer looks like.