According to the Newspage news agency, a sales adviser at Persimmon East Midlands had sent the following email last week to a fee-charging broker who had completed the free affordability check via the Homes England calculator and been overseeing a client’s purchase of a shared ownership property from a Persimmon site in the East Midlands:

“As the scheme is funded by New (sic) Homes England, one of their stipulations on the terms and conditions is that all buyers cannot pay a fee for their mortgage broker, this is the terms of the funding set by New (sic) Homes England scheme. This has only come to light as we are due to have a audit next week and we've had our legal team and an internal auditor going through everything to make sure everything is as it should be and its been picked up. Therefore the options are NAME at BROKER FIRM waves (sic) the fee and continues with the mortgage application, or you can get NAME at The Mortgage Store to take over your application you have previously spoken with her she doesnt (sic) charge a fee and is also currently doing a mortgage with the same lender (together) for one of my other customers, otherwise it'll be a case of withdrawing from the property.”

The broker emailed Homes England for clarification and received the following response from a manager at the Homes England Affordable Home Ownership team:

“The expectation from Homes England's perspective is that the affordability check of a customer must be undertaken free of charge to the customer, so as an adviser you cannot charge the customer a fee for this activity. When matters progress, and you are submitting a mortgage application on behalf of a customer there is nothing in our guidance to prevent you from charging a fee for this service. Providing an adviser does NOT charge the customer a fee for conducting their affordability assessment, and only goes on to charge a fee once they had been engaged by the customer to submit a mortgage application on their behalf, their actions would not be deemed to have contravened our guidance.”

While providers may establish a panel of one or more advisers to undertake affordability assessments for mortgage purposes, Homes England does not permit shared ownership providers to require the use of their panel mortgage brokers for mortgage applications.

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Providers must not require that an applicant takes out their mortgage through a particular adviser, irrespective of whether they undertook the financial assessment to ascertain a suitable mortgage level or product. 

They also must not receive financial (or other) incentives from advisers in return for inclusion on their panel.

Some mortgage products may have a fee associated with them, which is not prohibited by Homes England guidance.

Due to the specialist nature of shared ownership mortgages, the adviser should be experienced in, and knowledgeable of, this area and have access to a range of shared ownership mortgage lenders.

Speaking to the Newspage news agency at the time, Michelle Lawson, director at Lawson Financial, commented: "Thankfully, Homes England have clarified the correct position, but how many borrowers have had a catastrophic outcome and been forced to change broker, lose their mortgage product, or lose their property to their detriment? In a Consumer Duty world, the borrower and buyer should be at the forefront and companies should ensure that staff are equipped with accurate info when passing the detail on.”

A spokesperson for Persimmon Homes told DFT: “We apologise for any misunderstanding in the information conveyed by our sales adviser.

“To be clear, all customers are able to engage a mortgage adviser of their choosing to purchase homes privately or in connection with Homes England products.

“There are Homes England rules that govern which services an adviser may charge for, although none of our panel of advisers charge fees connected with affordability checks or advice.

“We are unable to comment on fees charged by third-party advisers that customers may wish to use.

“Naturally, fees can be charged in the usual way whereupon a broker has been engaged by a client to submit a mortgage application, irrespective of whether this is a private purchase or Homes England product.” 

Homes England published changes to its Shared Ownership affordability guidance in May 2024, requiring providers and advisers to fully adopt it by the end of July this year.

The guidance applies to shared ownership homes outside of Greater London which are either in receipt of Homes England grant funding or, if not grant funded, still form part of one of Homes England’s affordable homes programmes.