Standardisation of the ‘shared ownership’ model for homebuying is needed to make it easier for lenders to use the strategy, the Council of Mortgage Lenders has said.
Speaking to FTAdviser, Paul Smee, CML director general, said that a nationally agreed framework for shared ownership would benefit lenders, because at present they are finding it difficult to cope with the variety of different schemes used by local authorities.
Mr Smee couched his shared ownership argument in respect to the upcoming governmental election, due in May 2015.
“I suspect we may see initiatives in that area from one or more political parties... I think one of the key issues which we think when we look at shared ownership and things like that is for a lender, a thousand varieties of government plan or political party are very difficult to cope with.
“We can understand that there is a localism agenda... we can understand that all local authorities want to do something slightly different from the one sitting next door. However that does make it very difficult for lenders, particularly large lenders to cope with the variety of schemes.
“If you are going for something like shared ownership you do need to do it in a nationally agreed framework so that lenders know what they are lending on and know what their security is rather than doing it in lots of little different local ways because that adds to costs.”
He added that one of the problems a lack of standardisation leads to is a lack of resale opportunity, saying it is actually “very difficult to move shared ownership property”.
Mr Smee said: “If you are in shared ownership it is very difficult to sell your property and move to another shared ownership property, for example, and that something actually we need to help government address.”
Paul Broadhead, head of mortgage policy at the Building Society Association, said that he felt shared ownership is an “under utilised” product and similarly pointed to the lack of a resale market as a key issue.
“The problem with it so far is two things: there’s no real resale market for shared ownership at the moment so it probably needs some private support; [and also] there’s also a perception about shared ownership from some consumers.
“It could be a great solution for professional people but I think that there’s a perception that it is aimed at kind of social housing because it has always been provided by housing associations, and I think people believe that if its social housing then it isn’t for them.
“It almost needs rebranding and relaunching to say this is a solution for the market not just those people in social housing because if you are a professional earning £20,000 to 25,000 a year then it is a great way of accessing the housing market.”
