Would-be home buyers with Croydon’s own building company Brick by Brick can’t get mortgages – because it’s not registered as a shared ownership provider.
The Inside Croydon website – which has uncovered the fiasco – reports that: “Dozens of prospective buyers have had to be put-off or disappointed after it was discovered that banks and building societies will not provide mortgages under shared ownership schemes on Brick by Brick properties because the company is not recognised as a ‘registered provider’ of shared ownership properties.
It says that on December 18, the Brick by Brick sales team sent out an email to potential buyers wanting shared ownership properties which reads:
“Following the recent handover of our first lot of shared ownership homes, it has been flagged that a number of lenders are not satisfied with Brick by Brick as a private provider of shared ownership, and whilst we have demonstrated our intentions to operate and abide by regulatory standards specific to shared ownership, it has been advised that we become a registered,” the email said.
“Although the necessary steps towards meeting this obligation are being made, all shared ownership related sales will now need to go on hold until complete. This however is not a straight forward process and can take up to six months.
“Our legal team are doing all they can to resolve this issue and are currently exploring an interim solution in which could have you in the property a lot sooner. This we are hoping to be updated on following Christmas which once confirmed, you will be notified immediately on. “We sincerely apologise for the inconvenience this may cause you and will in touch as soon as we receive further update from our legal team.”
The Inside Croydon story says that a second email sent after Christmas reads: “It has been confirmed that whilst we are not a registered provider, the opportunity to sell any shared ownership is very limited and only at the discretion of your lender.
“We have now initiated the process to meet this requirement, however have been advised that it could take anywhere between six and 12 months.
“In addition to securing [registered provider] status, our priority is [to] manage the expectations of all purchasers and therefore would like to reassure you that we are doing our upmost [sic] best to not only accelerate this process, but also put in place an interim solution.
“One of these solutions entail a renting to buy concept at a subsidised rate, subject to BBB obtaining [registered provider] status. “This, our legal team are working on, however as you can appreciate is not as simple as it may sound and therefore unable to provide either confirmation or an indication of timing. “We are hoping to have further clarity on this next week which as and when we do, will send another update to you immediately.” the Inside Croydon report adds.
A follow-up story on Inside Croydon includes comments from Croydon South MP Chris Philp (Con) and Croydon’s Conservative opposition leader Cllr Tim Pollard. News From Crystal Palace have asked both for a comment, no reply from either so far.
News From Crystal Palace has accessed the Web for the booklet* for ‘Becoming a registered provider’. It includes the following:
Information for intending applicants
4.3 We find that applicants commonly have difficulty providing assurance in relation to one or more of three key questions we ask to determine eligibility:
Does the accommodation meet the definition of ‘social housing’?…….
Is it social housing?
4.4 Social housing is housing to rent at below market level rents, or to buy through schemes such as shared ownership, that is made available to those whose needs are not served by the commercial housing market.
A Building Societies Association spokeswoman told News From Crystal Palace:
They would register with Homes England. Guidance is here: https://www.gov.uk/guidance/register-and-de-register-as-a-provider-of-social-housing
“Without getting too technical a ‘Registered Provider’ simply means a body registered with Homes England to provide affordable housing (of which shared ownership is a part). “This allows them to receive Government funding for doing so. “Most registered providers are housing associations but there are more private companies coming into the picture. “They need to be registered so that Homes England can regulate them, ensure they’re financially viable, treating customers fairly etc.
“A key point for lenders is whether they adhere to the model lease described at section 5 here: https://www.gov.uk/guidance/capital-funding-guide/1-help-to-buy-shared-ownership
“Amongst other things, the model lease contains the ‘mortgagee protection clause’ which protects lenders in the event of a repossession, so lenders are cautious when it comes to companies that don’t adopt the model lease.”
The BSA spokeswoman added that there was a Government consultation on a number of these issues which can be found here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/827588/A_New_National_Model_for_Shared_Ownership_discussion_document.pdf
*The foreword to the booklet begins:
The Regulator of Social Housing (RSH) receives around 90 applications for registration each year. Applicants vary significantly in terms of: the nature of the housing they provide or intend to provide, their corporate structures, and their motivations for seeking registration with the Regulator. While we receive many applications, many do not go on to become registered providers, often because it is only after starting the process that they begin to understand the responsibilities that come with being a registered provider. (Words in bold by News From Crystal Palace)