Press
Mortgage Solutions 10th April 2006
Market Watch
Do you support the recent Government announcement that it will create a new task force to identify the longer-term potential for shared equity products?
Rob Clifford
Mortgageforce
The proposals aim to halt the UK's cycle of housing market boom and bust which is a challenging objective. One idea is to widen the scope of shared ownership – not just limit it to key workers. Given this significant extension of provisions, it seems entirely appropriate that a working party advises on policy creation and such a group simply must include representatives from lenders as well as Government officials and house builders.
As Paul Winter, director at Ipswich Building Society and a shared ownership expert puts it, part of the problem with the current programme is the lack of 'joined-up thinking' from some of the agencies involved, and from a lender's point of view that often means that every initiative is different.
Mehrdad Yousefi
Alliance & Leicester
The announcement of a task force charged with looking at the shared equity market is a vital step forward in meeting the aspirations of those who want to buy their first home. There is growing support for the private sector to help take this agenda forward and what is needed now is a firm commitment from the Government to build a sustainable shared equity market.
If the latest announcement by the Government is going to have a significant impact on reducing the number of first-time buyers struggling to buy their first home, it must also address the supply of housing so that affordability issues can be tackled. This will enable potential buyers to purchase an initial share of the property and take on additional share as their finances allow.
Ultimately, it would be an excellent idea to exempt buyers under the new scheme from Stamp Duty. Stamp Duty is still seen as a financial barrier by would-be homeowners despite the threshold rising to £125,000 in the recent Budget.
James Carter
Virtue Financial
The whistle-blowing debate appears to be being handled astutely by the FSA. It does indeed seem to be delegating regulation of brokers to lenders on this occasion but not in such a blatant way. To me, the problem of self-certification abuse lies mainly in applications for those who are employed.
I am sure the FSA is not happy with lenders accepting applications from brokers where a client is employed, as realistically, there should be no need for this. I believe its strategy here is to lean on lenders to tighten up their policy with regard to self-certification without publicly stating so. I am sure lenders are not so ignorant to believe that self-certification, for example, would not be abused on occasion but if the business is still coming in… this is obviously what the FSA is getting at.
Neil Gayler
Neil Gayler & Co
We fully support the announcement that the Government is to create a task force to look at the viability of further shared equity products.
As independent mortgage advisers, we often encounter first-time buyers struggling to get on the property ladder that are now, on average, in their mid-thirties and require a bigger deposit and be on higher incomes than ever before.
The Government has stated that it wants to see three quarters of the population in homeownership. Shared equity schemes can help bridge the increasing gap between average incomes and property prices – the average first-time buyer property costs around £153,633. The Chancellor has committed £970m to help first-time buyers by co-funding the purchase price. This should help sustain the market, which is almost certain to collapse without first-time buyers. Unless more affordable schemes are available, first-time buyers will be priced out of the market for the foreseeable future and possibly even for good.
Mark Leaper
Vesta Packaging
Any initiative designed to make the plight of the first-time buyer easier has to be welcomed, provided that is, the task force that has been created results in concrete action being taken.
I have always thought the sector has a lot of unfulfilled potential. It is still the case that many first-time buyers fail to consider it as an option because they have an outdated view of it being 'social housing' or even 'council housing'. This is changing and I find that shared ownership is beginning to appeal to first-time buyers across the income spectrum – even professionals who realise that it is an ideal way to their foot on the ladder sooner rather than later. Instead of waiting until they have saved enough to put down a deposit, they can opt for shared ownership and buy now.
Something certainly needs to be done by the Government to help first-time buyers. They are caught between a rock and a hard place with prices continuing to outstrip their earning or saving capabilities and no sign of this changing.
Sue Cox
Bananas Inc
First-time buyers are still not entering the market in anything like the numbers that would be healthy for the industry and shared ownership is a proven mechanism for helping them make their first purchase.
If this task force leads to action that helps first-time buyers by making shared ownership more available to them, then you can only say that this is a good move on the Government's part. However, if the task force ends up being a talking shop and leads to little or no action, then it is obviously a pointless exercise.
Something certainly needs to be done to help the first-time buyer market. We know there are tens of thousands of potential first-time buyers out there who are stuck. They cannot move forward because they do not have large enough savings for the deposits that most products require. And, with house prices still rising, many find that their ability to save is outstripped by the increasing value of property.
Shared ownership is a way to helping them out, but also products that allow high loan-to-value and are based on affordability calculations rather than income ratios. I find that these are particularly popular at the moment with brokers who have first time buyer clients.