The former HCA and the National Housing Federation have worked with the Council of Mortgage Lenders over the years to produce a product that is now acceptable to a comprehensive body of banks and building societies. The Council of Mortgage lenders have published the following list of lenders who will lend on shared ownership:
Barclays, Cambridge BS, Cumberland BS, Dudley BS, Ecology BS, First Trust Bank, Furness BS, Halifax, Hanley Economic BS, Holmesdale BS, HSBC, Ipswich BS, Kent Reliance, Leeds BS, Legal & General Mortgage Club, Lloyds, Mansfield BS, Melton Mowbray BS, Nationwide BS, Newbury BS, Penrith BS, Pink Mortgage Club, pms® Santander, Teachers BS, Tipton & Coseley BS, TSB, and Ulster Bank.
Many of these lenders serve specific regions or client groups. Having said that, the CML published this list in 2016 and more lenders are getting involved all the time, For example, Virgin Money and Atom Bank joined the club of shared ownership lenders in 2017.
However, because of the low volume in the shared ownership sector, there are still some institutions that will not lend on shared ownership, and those that do will often use particular underwriters within the team. Furthermore, some lenders will not lend directly but only through intermediaries. Consequently, shared ownership mortgage advice is not always available from high street branches. Specialist shared ownership mortgage brokers will work closely with the lenders underwriting teams and have the best knowledge of which lender is most appropriate for a particular potential shared owner. Therefore it is important to be able to make potential shared owners aware of such brokers to give them a good purchasing experience.
However, there is one consideration that local authorities need to be aware of. We previously looked at how local authorities can offer shared ownership only to purchasers with a local connection when funding their shared ownership development from their own resources (as opposed to it being part of a Registered Program through Homes England).
Although mortgages are available for such developments, many shared ownership lenders will not offer shared ownership mortgages unless the landlord is a Registered Provider (as opposed to a non-registered private company). Whilst the mortgage market is changing all the time and this situation is likely to change as lenders catch up with what is happening in the sector, when working up the Development Strategy this consideration must be taken into account.
The conveyancing process is another area where it is important to help the potential purchaser find a specialist to act on their behalf. Because of the nature of the product and the shared ownership lease, the shared ownership transaction is quite different from normal house conveyancing. Consequently, conveyancing solicitors who do not have experience in shared ownership can struggle, and this will impact upon the time to transact and possibly the cost to the purchaser.
Furthermore, the Legal Department of many local authorities will also not have experience in conveying shared ownership properties even if they have experience in conveying other properties, such as an outright sale or Right to Buy properties. In such cases, the local authority may choose to engage a specialist conveyancing solicitor to act on their behalf for the shared ownership transactions.
Buying a home can be a stressful time for anyone, but for the first time buyer purchasing a shared ownership property, it can be more so without access to conveyancing solicitors who know the process.
Similarly, the purchaser will want to engage a mortgage broker who works with shared ownership lenders. SDS has a network of specialists in these areas that they can offer to new entrants wanting to signpost their purchasers to the most appropriate mortgage and conveyancing services.
Read the other articles in the series