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Croydon’s housing company forced to become registered provider as mortgages refused on shared ownership properties
Brick By Brick (BBB), the housing company set up by Croydon Council, is being forced to become a registered provider after prospective buyers of shared ownership homes were left unable to secure mortgages.
Inside Housing has seen correspondence sent by a senior officer at Croydon Council, which said some of BBB’s customers are experiencing “limitations on their lending options specifically for shared ownership homes” due to “additional lending requirements” imposed by mortgage providers.
According to an update on the company’s website, these requirements include asking that “the seller become a ‘registered provider’ with the national regulator”.
A BBB spokesperson said the company is now “expediting” the process of registration with the regulator, with the company’s website suggesting that this will take around three months.
Potential shared ownership buyers have historically faced difficulties when trying to secure mortgages since mortgage lenders are less likely to invest in the product.
While private providers are permitted to sell shared ownership properties, a government consultation, released in August last year, said that many private owners deviate from the standard scheme, making lenders warier of investing in the product.
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In the case of BBB, it is clear the lenders in question required the company to become a registered provider in order for them to be willing to give mortgages to prospective customers.
The story was first reported by local blog Inside Croydon, which obtained letters sent from BBB to the customers affected.
BBB was set up by Croydon Council in 2015 and has a pipeline of more than 1,200 homes under development, including homes for sale and homes that will be returned to the council to house people on its waiting list.
A BBB spokesperson said: “Brick By Brick was established to create well designed homes that are affordable for the people of Croydon.
“We develop high-quality homes on small sites or underused public land, with the proceeds from sales returned to the council to be reinvested in the community.
“Unfortunately we are currently experiencing some limitations on the lending options for shared ownership homes because some lenders have imposed additional lending requirements for these kind of properties, making it more difficult for private developers to offer the shared ownership product.
“We are able to overcome these regulatory hurdles by becoming a registered provider with the Greater London Authority and Homes England, and are currently expediting this registration process.
“This will increase the number of lending options available to our customers and we look forward to be able to complete the sale of these shared ownership homes in the coming months.”
