A market without Help to Buy

Sean Hanson, Senior Product and Pricing Manager - Affordable Housing, gives his thoughts on a market without Help to Buy.

Writing the headline for this section made me pause for a moment to reflect on the success of the Help to Buy scheme - it really has been a game changer for the housing market.  It also makes me think about what could happen as the scheme winds down and eventually closes in April 2023.

There are a couple of things to focus on:

• Is the scheme going to go without replacement?
• How can housebuilding continue to thrive without it?

The answers to both these questions are linked. Firstly, the UK Government has said that Help to Buy will end and not be replaced – however, with a general election due in the next few years, the potential for announcements on further support for the housing market are possible. However, in the absence of any public support, there are private schemes coming to market to support new build through opening up the ability to offer mortgages with a 5% deposit.

In turn, that should mean that annual housing output doesn’t need to decrease, which is good news – people are always going to need homes. And we know that the past year or so has really changed people’s expectations as to what they want from their home, with home working becoming a much bigger part of everyone’s life.

Could Shared Ownership be the answer?

Sometimes overlooked due to a lack of awareness or understanding of the scheme by consumers, Shared Ownership provides a viable, affordable way for people to get on the property ladder.

It’s an option that may be suitable for your customers as the scheme offers people the ability to purchase a share in a property whilst paying rent to the organisation who owns the remaining share (typically a Housing Association).

What are Shared Ownership’s key benefits?

• Lower deposit requirements (as the deposit is only required based on the share the customer is purchasing).
• Ability to purchase more of the property when occupiers are able to afford it (in a process called ‘staircasing’).
• Potential to limit stamp duty payments.
• A wide variety of properties, including new build, are available.

We know support matters in tough times

As well as being What Mortgage’s Best Shared Ownership Mortgage Lender six years running (2016 – 2021), we’ve also won another award at the MoneyAge Mortgage awards for Best Shared Ownership Lender. We’ve won this award for the past two years (2020 - 2021) – ever since its inception.  Both awards are based on consumer votes and an independent judging panel respectively. Our successes show that we have something that’s appreciated by potential homeowners and industry experts alike.

Our success in awards is built on our unwavering commitment to supporting the Shared Ownership scheme. We were the largest lender to remain in the market at 95% borrower share throughout the pandemic. At a time when several lenders temporarily exited, it was crucial that we stayed to support a market that has come to trust us as an expert in the field. In fact, in 2021 we were the number one lender for Shared Ownership illustrations on Twenty7Tec sourcing system indicating just how important Shared Ownership is to us, but also how important we are to the scheme.[1]

Helping people have the home they want

Affordable housing is important. It’s important to the Society, it’s genuinely something we invest a lot of time in to make sure that we’re doing the right thing. It’s equally important to the customers that wouldn’t be able to buy a property without the support of the Society and the schemes that we support.

As a mutual we take pride in the amount of support we give to this important sector and the purchasers, the majority of whom are first time buyers, we help in their home ownership aspirations. There’s always a tendency when talking about mortgage lending to focus on the money that we lend, and for sure, that’s important – but another way of looking at it is the number of dreams that have been fulfilled.

[1] Based on YTD Twenty7Tec Shared Ownership illustrations, figures taken up to 31/12/2021