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Equity Stakeholding: the new right to buy?. Peter Williams Council of Mortgage Lenders [email protected] My Presentation. The Context Existing opportunities Shared Equity – Open Market Homebuy Social Homebuy Conclusions/Questions Treading a careful path!. The Context.

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equity stakeholding the new right to buy

Equity Stakeholding: the new right to buy?

Peter Williams

Council of Mortgage Lenders

[email protected]

COUNCIL of MORTGAGELENDERS

my presentation
My Presentation
  • The Context
  • Existing opportunities
  • Shared Equity – Open Market Homebuy
  • Social Homebuy
  • Conclusions/Questions
  • Treading a careful path!

COUNCIL of MORTGAGELENDERS

the context
The Context
  • Government commitment to growing home ownership – choice, mobility, asset based welfare
  • Home Ownership Task Force concerns re existing low cost home ownership programmes
  • Recognise impact of MCOB, Responsible Lending, Treating Customers Fairly via FSA plus Basel 2 and HIPS
  • Experience of the RRO on Home Improvement
  • CML study of demand for Equity Loans (The potential market for equity loans in the UK, Glen Bramley, CML research report, 2004)

COUNCIL of MORTGAGELENDERS

existing opportunities
Existing Opportunities
  • RTB performed well from a lender perspective
  • Shared Ownership – some difficulties re arrears, performance of some HAs. Concern re low value shares. Joint Guidance issued to help overcome this (Shared ownership: joint guidance, Housing Corporation, CML, NHF, September 2004)
  • Number of lenders shrinking/stable
  • Homebuy performed well and preferred by lenders/borrowers
  • Right to Acquire – limited take-up

COUNCIL of MORTGAGELENDERS

shared equity open market homebuy
Shared Equity – Open Market Homebuy
  • Extending Homebuy – October 2006 and within current parameters re £ income, property price, repairs etc as per Capital Funding Guide
  • Splitting the equity share –lenders/govt
  • Process complicated by the Key Facts Illustration (KFI) – advice to customers
  • 3 lenders participating in pilot
  • Flexibility/portability on the agenda but …
  • Debt not equity; risks for lenders and borrowers

COUNCIL of MORTGAGELENDERS

social homebuy
Social Homebuy
  • Limited detail – in principle support but …
  • Voluntary with a pilot
  • Property may already be charged – SO model/Security Trustee
  • Minimum loan size; legal/survey costs
  • Loan will be first charge but enforceable?
  • Repairing obligations – real concerns?
  • Resale? What is the market?

COUNCIL of MORTGAGELENDERS

conclusions questions
Conclusions/Questions
  • Lender appetite for equity stakes limited
  • Costs of equity stakes – legals/surveys/effective interest rate etc and demand/return
  • Questions of best advice?
  • Customer appetite?
  • Issue now complicated by MCOB, Basel 2
  • Portability/flexibility – ideal but …
  • Explore in detail..time/resource consequences
  • Need effective partnership with landlords
  • Support aspiration but in practice?

COUNCIL of MORTGAGELENDERS

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