SHARED EQUITY SCHEME FOR HOUSE BUILDERS

February 2009

What Does it Mean?
Shared Equity is an effective marketing strategy which can facilitate the plot sales process for house builders of all sizes. The concept allows purchasers to defer payment of up to 25% of the purchase price, the builder’s position is secured and the deal generates future cash flow for the builder, as well as a plot sale.

How Does It Work?
The purchaser obtains 100% ownership of the property in exchange for payment of 75% of the purchase price. The remaining 25% is secured by a Standard Security which ranks behind the principal lender’s security. The 25% is repayable if the property is resold, remortgaged or on the tenth anniversary of the purchase date, whichever occurs sooner.

Key Benefits?

• The scheme creates interest and footfall to a development.
• The scheme can be offered relative to specific plots which may be proving more difficult to sell than others.
• Ownership is not shared, purchasers receive 100% title unlike some assisted move schemes whereby the purchaser only gets title to 75% of the property.
• The percentage of “shared” equity is not fixed and can be determined by the builder in accordance with their business needs
• It is attractive to first time buyers who perhaps don’t have a deposit.
• It generates future cash flow for builders.
• Unlike a discount the “shared” element is not written off and will be paid to the builder in the future.
• The secured element is interest free and negates the need for a purchaser to have a deposit as they simply borrow 75% from a lender.

Who Should I Contact For More Information?

Lorna Brown
New Homes Team
0131 220 4020
lbrown@maxwellmaclaurin.co.uk