Mark Fisher (left) and Darryl Lawrence (right) both made presentations at a recent Council of Mortgage Lenders Buy-to-Let Conference, as a part of a project being led by Mark to highlight the advantages to lenders of leasing schemes and to challenge some of the barriers that social housing providers and community groups were facing getting lender approval for owners to put their properties into them.
Mark reports as follows:
Darryl and I presented at the CML’s Buy-to-Let conference recently with a view to explaining the logic of what we are offering nationally [i.e. in the form of leasing schemes] and to get some feedback as to how they see the empty homes issue. In a nutshell, they offered no real objections to the logic and I suspect they were quite surprised by the level of empties nationally and more importantly, how that affects them. What we asked for was 3 things…
1. Work with us
2. Agree to a lease & repair
3. Agree to a 2nd charge
An important aspect was that these were the directors and policy reps of their organisations and so had a business focus on what could work and what couldn’t.
One issue raised by the lenders is the problem of multiple contracts across the country and a lack of understanding of the scale of the problem. Some ideas were put forward and we are following up on these to explore further. Darryl is looking at a working group via the HCA in the Manchester area with a company called HML who service the books of 35 lenders. They have suggested that they are already geared up to process problematic or different cases and have the trust of the sector.
It was also suggested that we may be able to use the LA/Lender/HCA/DCLG network already set up to deal with Mortgage Rescue so that we can have a sane communication line and I am exploring this with Graeme Hough at the HCA.
Mark was also invited to talk to the legal and technical teams at Paragon and describes his experience as follows:
Paragon are being absolutely brilliant in trying to help. They now understand what we need to do and we tried to work through the schemes in detail to see if we can make progress.
In a Buy-To-Let context, they would have great difficulty in allowing 2nd charges on individual properties that were part of a portfolio because they generally have an ‘All monies charge’ across the borrowers business. This is a legal issue for them because they are bound by policies put on them by their funding sources but are going to take this forward with their funders.
The really interesting aspect was that their legal people are quite uncomfortable with empties on their balance sheet – but they never find out until there’s a problem raised by their borrower or a third party. More importantly, if the legal team knew of a problem, they would be forced to act on one way or another. If an empty home fund was the best option, it would be easier to say yes to us rather than take legal action. This is because they may be extending their lending to a borrower who has good credit but who may have empties they are unaware of - and the fact that it has a direct impact on their balance sheet.
They also said they would be really willing to work with us if we had a ‘hub’ or somewhere they could route everything through and are far more nervous about enforcement than I thought they were. They were also very keen on the suggestion of sharing intelligence so that we could work together, effectively cutting the borrower out of the negotiation.
Is this a role for the EHN? Maybe with some funding?