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Brokers slam housing associations for conditional selling

ended 02. May 2023

Brokers have slammed housing associations for conditional selling, with one saying they are “using this as a way to line their pockets with referral fees by insisting buyers use certain solicitors and mortgage brokers”. The same broker says that, on quite a few occasions, an AIP'd client of his has been told they can only reserve a shared ownership property if they use the Housing Association-approved broker, even though he is H2B-accredited for his region. Newspage® asked a selection of brokers for their views on this alleged practice, which can be seen below.

10 responses from the Newspage community

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Emma Jones
Managing Director at Whenthebanksaysno.co.uk
I’m so glad this story is out there, as it’s happening with a lot of housing associations. Housing associations make the interested buyer send all of their personal information to their preferred broker, who then assesses the advice they have had from their current broker, and if they deem this to be advice they wouldn’t give, they pull the buyer's chances of owning that home. They decide what rate of interest the buyer can pay. Pressure from housing associations regarding mortgages seems completely biased, especially when it all comes down to commissions being paid each way.
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Matthew Jackson
Director at Mint FS
For a scheme that was designed to benefit as many buyers as possible, to see it corrupted by developers, estate agents and housing associations is painful. Housing associations act on behalf of the government policing what is a very valuable affordable housing scheme, but in some circumstances are using this as a way to line their pockets with referral fees by insisting buyers use certain solicitors and mortgage brokers. This lack of choice drives down service and blurs the line between who is the actual client, with brokers valuing the relationship with the Housing Association more than the one with their own client. Shared ownership needs a rebrand, a relaunch and to offer more inclusive advice to everyone who needs it.
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Gary Bush
Financial Adviser at MortgageShop.com
Housing Associations and their "friendly" broker links has sadly been going on since the 2008 crash. It's very annoying and of course totally illegal. It is often hidden behind words of "our adviser needs to check affordability, separate of your adviser" and "it's much more streamlined if you use our advisers". What then often happens is the housing association's advisers only have a limited panel of lenders and they fail to gain an agreement. Even if the clients subsequently secure funding via ourselves, the Housing Association makes it difficult by stating the lender we are using isn't "High St enough" for them.
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Nicola Schutrups
Managing Director at The Mortgage Hut / William James Wealth Management
As a business, we are lucky enough to work with a number of housing associations helping buyers of shared ownership properties get qualified. Not all buyers are eligible for shared ownership as per government guidelines, so housing associations need to financially qualify applicants, and they will generally use a regulated broker for this. Normally, housing associations have panels of approved brokers, in our experience it's free to be on and they never require payment for this. We've never had a housing association ask for payment or commissions, so I would suggest that if this is happening it's not widespread.
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Katy Eatenton
Mortgage & Protection Specialist at Eatenton Finance
I have personally never had a problem with clients purchasing Shared Ownership properties. They have to be qualified to check affordability, which is understandable, but my clients let them know they’ve paid an upfront non-refundable fee to me and engaged my services so they are not willing to switch advisers. Simple.
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Justin Moy
Managing Director at EHF Mortgages
Yet again we have 'conditional selling' in the property sector. When you have a very captive audience such as those looking at the Shared Ownership scheme, prospective buyers will be even more scared that if they try to exercise their rights, they will potentially lose their property. What is more fustrating is that typically the mortgage broker will invest a lot of time talking about the scheme, how it works, the process to follow and potentially the kind of properties in scope, only for the financial inducement wheels to taketo over and result in a lost client. I just hope this is a very isolated incident and that in the main this is not a common practice, but this practice needs to be eradicated immediately.
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Riz Malik
Independent Financial Adviser at R3 Wealth
This is quite concerning and I have had suspicions of this in previous transactions. Clients should be free to choose who they receive their financial advice from and not be fearful of losing a property. We need an immediate and thorough review to address the matter.
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Bob Singh
Founder at Chess Mortgages
As someone who was hauled over the coals by BBC Radio in the late 90s when I was an in-house broker for an estate agency chain, I feel I can talk about this practice having seen it from both sides. From a developer or Housing Association perspective, it’s not just about the remuneration, it’s the control aspect. Dealing with pally brokers and lawyers means they have entities that have a vested interest in the deal processing to completion and all work together towards that common goal. I’m sure all brokers and lawyers are totally ethical and they act in the best interests of the client but it does deny the customer freedom of choice and possibly a better mortgage or conveyancing deal elsewhere. Conditional selling is outlawed by the Property Ombudsman but at times the fear of losing a property drives the customer into their hands. Until we see fines and penalties being handed out, we may not end this practice. It’s high time tougher rules were introduced.
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Hannah Bashford
Director at Model Financial Solutions
In my experience, Housing Associations ask an adviser whether they are affiliated to qualify the applicant before they will proceed. When I have provided the paperwork, they still insist it has to be signed off by their advisers. It’s such a waste of time for those advisers and the clients. Housing Associations have a duty to make sure the applicants can afford the mortgage but surely any FCA-qualified adviser who deals with those mortgages and can show the relevant paperwork should be enough?
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Paul Neal
Mortgages & Equity Release Advisor at First Choice Financial Services
It's another housing market scourge when housing associations insist that the borrower has to speak to their own adviser for an "affordability check" and to ensure that the buyer's chosen broker has completed the works correctly. Has this been addressed or has anyone been punished? Not to my knowledge. It's a practice that will continue until something is done about it.