Complying with the Equity Loan Scheme

The success of the help to buy equity loan scheme is indescribable. 211,000 equity loans were granted from the start of the scheme to December 2018 resulting in £11.7 billion being loaned.

According to figures from the Ministry of Housing, Communities, & Local Government this has increased new build housing supply by 14.5%.

The existing product is due to come to an end in April 2021 and is due to be replaced by an alternative until March 2023. However, this hasn’t stopped some in the industry speculating and considering their own alternative product ahead of April 2021.

Any providers (private or registered) looking to offer their own form of equity loan or equity mortgage product will have to be careful to ensure they either comply with consumer credit or regulated mortgage legislation, or that they qualify for an exemption under such legislation. The exemptions available for equity loan schemes are currently extremely limited and need to meet very specific criteria. We would strongly recommend that providers seek legal advice on the form and content of documentation to be used for any equity loan scheme.

It may well be that with such tricky regulatory waters to navigate on equity loan products, that any re-branded help to buy product is paused and shared ownership steps up as the tenure of choice for affordable home ownership.

With the Government considering options to expand the flexibility of shared ownership there is a growing momentum for the growth of this now fully market established product.

For more information, please contact either Jonathan Corris, Partner, or Alasdair Muir and Alice Overton, Solicitors.

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