View more on these topics

Nationwide warns regulations are stifling shared equity market


Nationwide is warning that regulations are undermining the growth of shared ownership and shared equity lending.

Speaking at a Westminster Social Policy Forum on housing yesterday in London, Nationwide head of mortgage strategy and policy Andrew Baddeley-Chappell told delegates the current regulatory regime made shared equity and shared ownership unattractive to lenders.

His warning came the same day as the Government unveiled a £280m boost to its FirstBuy shared equity scheme which it says will help 16,500 first-time buyers purchase property. Nationwide is one of the biggest shared ownership lenders.

Shared ownership works by the buyer purchasing between 25 and 75 per cent of the property and then paying rent to a housing association which owns the rest. For a shared equity loan buyers must fund at least 70 per cent of the deal through a mortgage or savings with the rest funded by the Government or home builders who will retain their share in the home until it is sold.

Baddeley-Chappell said: “There are some real challenges from the regulatory regime. Shared ownership is broadly okay but shared equity brings much more trouble because the regulator is requiring lenders not just to consider the share borrowers are buying but the whole property which, of course, they can’t buy.

“These markets are desperately struggling and while the Homes and Communities Agency has done a good job trying to motivate, it is a sad feature of the market that this sector is under-serviced at the moment because of competitive difficulty.”

Baddeley-Chappell says shared equity and shared ownership borrowers are “high-risk” for lenders.

He says: “They are complex models with a combination of potentially higher risk borrowers with more complex needs.

“The risk comes not just from mortgage lending but increasingly reputation and regulatory. There is a strong case to suggest you can lend on shared ownership in a successful way but there are other risk factors.”

Lentune Mortgage Consultancy director Stuart Gregory says there is a lack of demand for shared ownership.

He says: “Every first-time buyer I have seen recently had assessed shared ownership and decided instead to save for a 10 per cent deposit and buy on the open market. Many who have bought homes are finding it a struggle to sell them which is putting buyers off using it.”


News and expert analysis straight to your inbox

Sign up


There are 3 comments at the moment, we would love to hear your opinion too.

  1. Have Nationwide considered the possibility that the markets they wish to operate in are high risk?

    Shared Ownership, Equity, part rent part buy, affordable, local occupancy and any permutation thereof create problems somewhere along the line. As an IFA I often had people going into these schemes with rose tinted specs, not a clue what lay ahead and refusing to heed my warnings then a few years later begging me to get them out of the mire.

    The regulators need to look at the whole package not just the part the lenders think is adequate security, the borrowers need to make informed decisions and a wealth warning should be placed on all mortgage offers.

  2. If you work hard for the money you have, you don’t want to lose it using a silly trading site. Find out about this great trading system here!

  3. Based on 30 years’ experience of providing both these options, I would say that from the buyer’s point of view shared equity is preferable to shared ownership. There are fewer complications while living there and eventual resale is much easier.

Leave a comment