At the risk of being judged right from the off, I was very fortunate that my introduction to the concept of Shared Ownership property came very early on in my career as… an Estate Agent! (Stick with me, please.)
It was a 25% share of a 1-bed flat in a relatively central location in the town I was working in. This was pre-2008 so it was priced somewhere around £30k, which was the cheapest thing on our books at the time (apart from a vacant static caravan that no one knew how we had on the market and we’d long since lost the keys).
The concept sounded fairly straight-forward, and was explained to me at the time as a ‘Part Buy - Part Rent’ transaction designed for people whose affordability was falling short for a standard purchase. With this flat, you would own a 25% share of it and pay rent on the remaining 75% to the housing association. It was also a leasehold property, as were/are most flats.
The additional caveat was that buying it wasn’t as simple as just getting a mortgage approved. You also needed to be approved by the aforementioned housing association, which anyone back then (we’re talking almost 20 years ago) will tell you wasn’t as straightforward as just asking nicely. The parameters set in the criteria for the housing association were quite strict and all encompassing (short of your blood type and sexual orientation, just) which helped me learn early on in my sales career that doing 50+ viewings with no sale needed a better strategy.
Somewhat unfortunately for me, my mortgage adviser at the time hadn’t ever done a shared ownership mortgage either. Together, we eventually found a buyer who earned between £18,439.67 and £18,439.74 (I’m only exaggerating slightly here) and helped to get approval from the housing association, which led to the property completing. Hooray!
Fast forward to present day, this then budding property expert (me) became a relatively successful Mortgage and Protection adviser and later a Regional Manager/Trainer of all things Mortgages and Protection. As an adviser, my experience with that shared ownership flat meant I was significantly better equipped to handle any enquiries that came my way. I felt a lot more comfortable understanding the order of everything, which aided my goal of becoming a One Stop Mortgage Shop for anyone looking for a mortgage.
Later, as a trainer, I noticed quite quickly when onboarding both new and experienced advisers from all walks of life that an exceptional amount of them hadn’t had the trials and tribulations I had been afforded in my past life, so Shared Ownership was brand new territory for them. With the work we did together, I later established a specialist Shared Ownership team to handle the enquiries we were getting as we built a reputation as one of the ‘go to’ places for this sort of advice.
For any new or experienced advisers out there who have found themselves with a knowledge gap around Shared Ownership, I’ll briefly detail a couple of the areas that are worth taking note of:
Lenders. Not all lenders offer Shared Ownership. The ones that do may have a particular range. Halifax has an ‘affordable housing’ range, for example.
Affordability. One important thing to note straight away is that for Shared Ownership, there is a requirement not just for lender affordability, but also for the Shared Ownership provider. My experience has identified that the Shared Ownership provider tends to be stricter here, mainly around the debt-to-income ratio. Most will provide a calculator of some sort which allows you to quickly establish whether or not the client meets the requirements.
Get to know your local Shared Ownership providers. This will allow you to build a collection of affordability calculators and basic criteria requirements.
Good luck exploring Shared Ownership and unlocking additional ways to do business in the current market. And look out for my next blog in which I’ll be discussing Ported Mortgages.
If you found this article useful, find out what else we do to help mortgage advisers in their day-to-day: https://dashly.com/partners/mortgage-advisers
Dashly Operations Manager - Intermediaries
Book a call: https://meetings-eu1.hubspot.com/meetings/steven-poole