Five housebuilders await FCA authorisation for shared equity lending

Five housebuilders await FCA authorisation for shared equity lending



Five housebuilders are currently seeking authorisation from the Financial Conduct Authority (FCA) to provide shared equity loans.

Last month, the Home Builders Federation claimed that the Help to Buy scheme had reduced demand for shared equity schemes.

However, a freedom of information request submitted by Development Finance Today has now revealed that five housebuilders are still awaiting a decision over their application.

Just one housebuilder currently holds authorisation to offer shared equity loans.

Shared equity

Shared equity loans became regulated by the FCA under the Mortgage Credit Directive (MCD) in March 2016.

Under the new regulation, housebuilders require permission to enter into, administer or advise on a regulated mortgage contract.

Housebuilders wishing to begin or continue offering shared equity products were given the option either to seek FCA authorisation or outsource to a third party.

Meanwhile, those who intended to cease offering shared equity loans were instructed to release the loan before MCD came into operation.

Help to Buy

Under Help to Buy, the government offers an equity loan of up to 20% towards the purchase of a new build or housing association property.

Buyers are required to provide the additional 5% deposit, along with a 75% mortgage for the remaining portion of the property.

Last month, an MP slammed the Help to Buy Isa, which offers a 25% bonus on every £200 saved.

Tottenham MP David Lammy claimed that the Help to Buy Isa website had not made it clear that the 25% bonus could not be used for a deposit on a property at the point of exchange of contracts.

In the same month, lenders warned that delays caused by using the Help to Buy scheme could threaten developers’ profits


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