From This is Money:
They have huge appeal, especially to young people who would otherwise find it hard to buy.
Unfortunately, these schemes are not quite what they seem. Lenders, mortgage brokers, housing associations and others are all urging extreme caution, warning purchasers that these deals could store up massive problems for the future. Buyers should consider alternative routes to ownership, they say.
The reason for the offers is that homebuilders are in desperate trouble, with some verging on bankruptcy, and others slashing prices and cutting staff.
Persimmon, the nation’s biggest homebuilder, last week said profits had plunged by more than 60% over the past year while the number of homes it had sold had fallen by a third. It described conditions as ‘the worst in recent memory’.
To help sell properties to cash-strapped buyers who otherwise cannot get mortgages, developers are offering shared-equity schemes.
In a typical shared-equity deal, the developer ‘lends’ the homebuyer 25% of the p…