Help to Buy has benefited from an increased profile in recent times (probably due to the impending closure date!) and this has helped more FTBs recognise its attributes – which is a good thing – although it’s prudent to point out that it should not be considered an all in-compassing solution. And, on the flip side, despite this rise in lending prominence there are still pockets within the market where it can prove valuable for a certain type of borrower which often goes overlooked.
I believe this type of product is seen by most borrowers, as being one which sits squarely in the domain of mainstream or high-street lenders. Meaning the role of specialist lenders can often go ignored, which is a shame. There are specialist lenders who can provide Help to Buy solutions for borrowers with an adverse credit history, IVA’s or even bankruptcy issues, and this is an important part of the scheme which we tend to hear very little noise around (T&Cs obviously apply!).
The other area we are seeing increased enquiries from, especially more locally with the amount of building works taking place, is Shared Ownership.
Shared Ownership Schemes are normally provided through housing associations. You buy a share of your home, between 25% and 75% of the property value, and pay rent on the remaining share to the housing association. You usually have the opportunity to purchase a bigger share of the property later on (normally called ‘staircasing’). Local housing associations must confirm your eligibility in order to join these types of schemes.
According to research by the Leeds Building Society, this is rising in popularity outside of London. The report suggests that the South West has seen the greatest rise in the use of shared ownership between 2009 and 2018. This was followed by the East Midlands and the West Midlands. London saw the largest decline, falling from 34% to 13% over the same period.
The specialists might not be applicable for everyone, and still form a small proportion of the overall lending figures, but they should be playing a bigger role in supporting more complex or low credit scoring borrowers get a foot on the property ladder for the first time or even back onto it after falling off.