Time to 'big up' shared ownership

News Details
  • 06/10/2022
  • Daniel Hobbs
  • News

Dan Hobbs took part in a round table discussion on how advisory firms and lenders can support first time buyers.

The industry must work on changing the public's perception of the shared ownership (SO) market as the housing sector becomes more challenging for first-time buyers (FTBs), says a panel of industry commentators.

A roundtable was hosted by Sesame Bankhall Group (SBG) recently as a follow up to the white paper 'Overcoming the challenges facing UK first-time buyers', published by the newly formed Industry Panel for Financial Advice (IPFA).

Speaking at the event, SBG propositions director - mortgages and later life Alex Beavis said shared ownership required a lower deposit than a traditional mortgage because borrowers were only buying a portion of the property, so it could be the solution for many struggling to save to buy a home.

"Historically, it had a bad reputation in the market as people thought it was second-grade housing, and it very much isn't that," said Beavis.

"So, the question for us in the industry is: how can we change this perception and promote it as an alternative to high-LTV mortgages, or some of the other FTB schemes, and encourage developers to build more SO properties?"

Fairstone Group managing director Steve Easter said the success of SO depended on lender support.

"As long as the lenders jump on board, it can work," said Easter.

"Nationwide did a lot of it back in the 1990s but there weren't too many options. If all the lenders go back into it, it can work."

SBG strategic relationships director Steph Charman added that support would be needed across the board from both mainstream and specialist lenders.

Nationwide head of intermediary support and new-build Andy Dean said SO was moving away from being a niche product.

"It's now regarded as something more mainstream and as a real solution for FTBs."

"If you look at the growth of it over the past few years, that should continue to be the case," said Dean.

He added: "There's been really good willingness to support SO from the lender market; pre-pandemic, there were 25 to 30 mainstream lenders supporting it, and the good news is most have returned."

"This is a genuine option for getting on the housing ladder so it does need some legislation changes around it and it needs its profile changed."

"Brokers need to speak more confidently about it with clients."

New Leaf Distribution managing director Daniel Hobbs says the industry has a responsibility to communicate all options available to clients, including SO.

"It's all about adding value to clients and being educated," he says.

"So it's good timing with the Consumer Duty, and the focus on what we should be doing as an industry to communicate better to customers and not fall back into old habits."

Sesame Bankhall Valuation Services chief operational officer Simon Jackson says there is a gap in the market as the government's Help to Buy scheme is wound up.

"We know Help to Buy's last reservation is 31 October," says Jackson.

"The market became reliant on the scheme but we saw a reduction in reliance on it. We saw 20% of new-build purchases done using it; the figure was upwards of 40% going back four or five years."

Jackson adds: "What will come in Help to Buy's wake will be a range of solutions to fill the void, and that's where the broker comes in to help them navigate."

"With rents going up probably more quickly than interest rates, utilities going up, fuel, etcetera, it's taking much longer to save for a deposit, and we need FTBs to keep things moving. We ought to be helping them."

The SBG white paper calls on lenders, housebuilders, MPs and regulators to collaborate to find new ways to help FTBs secure mortgages, and seeks to address the three main barriers to buying: raising a deposit, affordability pressures and a lack of suitable homes.

By Rebekah Commane | Mortgage Strategy

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