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What are the risks for first-time buyers taking out a shared ownership mortgage?

Date: 29 April 2021

To: Phillippa Cardno, Operations and Sales Director, Newbury Building Society

Dear Ms Cardno,

Re: Are the risks for first-time buyers taking out a shared ownership mortgage different from any other first-time buyer?

Newbury Building Society feature as a lender case study in the Cambridge Centre for Housing & Planning Research (CCHPR) report Shared Ownership Agency Market Review 2020 (commissioned by Metropolitan Thames Valley (MTVH) and published in February 2021). In the report you are quoted as saying:

“We’re a cautious lender but first-time buyers of shared ownership aren’t any different from any other first-time buyer. The risks are the same”.

I would be grateful if you could clarify the following points.

• When you said ‘the risks are the same’ were you referring solely to lender risk?
• What risks are faced by home buyers taking out a mortgage for a % share in a shared ownership home?
• When you said ‘first-time buyers of shared ownership aren’t any different from any other first-time buyer’ did you take into consideration risks arising for shared owners from their legal status as assured tenants?
• In particular, did you consider the risk to shared owners of possession with no legal right to reimbursement of equity to be irrelevant for the purposes of the CCHPR research and, if so, why?

Shared Ownership Resources was launched in March 2021. The platform aims to provide greater clarity on complex issues to assist first-time buyers and shared owners in making informed decisions. This open letter will be published on the website, and I will publish your response on receipt. I look forward to hearing from you.

Newbury Building Society Response (11/5/2021)

Dear Ms Phillips,

I refer to your email that I received yesterday.  I did not receive your first email dated 29 April.

With regard to your first point this is correct, I was referring to lender underwriting risk.

With respect to your other points I feel these would be more suitably directed to a housing association/lawyer for a response.

Regards Phillippa

Phillippa Cardno

Operations and Sales Director | Newbury Building Society

90 Bartholomew Street, Newbury, Berkshire, RG14 5EE

T: 01635 555705 | E: phillippa.cardno@newbury.co.uk| W: www.newbury.co.uk