The industry must work to change public perception of the condominium (SO) market as the housing sector becomes more difficult for first-time buyers (FTB), says a panel of industry commentators.
Speaking at a follow-up roundtable to Sesame Bankhall Group’s (SBG) white paper, ‘Overcoming the challenges facing first-time buyers in the UK’, Alex Beavis, SBG’s Director of Proposals – Mortgages and later life said SO required a lower deposit than a traditional mortgage because borrowers were only buying part of the property, so it could be the solution for many who are struggling to save to buy a house.
“Historically it had a bad reputation in the market because people thought it was second-rate housing, and it really isn’t,” Beavis said.
“So the question for us in the industry is, how do we change that perception and promote it as an alternative to high LTV mortgages, or some of the other FTB programs, and encourage developers to build more of SO properties?”
Fairstone Group chief executive Steve Easter said SO’s success depended on the support of lenders.
“As long as the lenders come on board, it can work,” Easter said.
“Nationwide did a lot of that in the 1990s, but there weren’t too many options. If all the lenders go back there, it can work.
SBG’s Director of Strategic Relations, Steph Charman, added that general support would be needed from traditional and specialty lenders.
National Middle Support and New Build Manager Andy Dean said SO is moving away from being a niche product.
“It is now seen as something more mainstream and a real solution for FTBs.
“If you look at the growth of it over the last few years, it should continue to be that way,” Dean said.
He added: “There has been a very good will to support SO from the lender market; before the pandemic, there were 25-30 traditional lenders supporting it, and the good news is that most are back.
“It is a real option to move up the housing ladder, so it needs legislative changes and its profile needs to be changed.
“Brokers need to talk more confidently about this with clients.”
New Leaf Distribution chief executive Daniel Hobbs says the industry has a responsibility to communicate all options available to customers, including SO.
“It’s about adding value to customers and being educated,” he says.
“So it’s a good time with Consumer Duty and the focus on what we should be doing as an industry to better communicate with customers and not fall back into old habits.”
Simon Jackson, chief operating officer of Sesame Bankhall Valuation Services, said there was a void in the market as the government’s purchase aid scheme was scrapped.
“We know Help to Buy’s last reservation is October 31,” Jackson says.
“The market has become dependent on the program, but we have seen a reduction in reliance on it. We’ve seen 20% of new build purchases made using it; the figure had been above 40% for four or five years.
Jackson adds, “What will come in the wake of Help to Buy will be a range of solutions to fill the void, and that’s where the broker comes in to help navigate them.
“With rents likely rising faster than interest rates, utilities rising, fuel, etc., it takes a lot longer to save for a deposit, and we need FTB to keep things going. things. We should help them.
The SBG white paper calls on lenders, homebuilders, MPs and regulators to work together to find new ways to help FTBs get mortgages, and seeks to remove three main barriers to buying: increasing bail, affordability pressures and lack of suitable housing.