Banks should offer ‘mates mortgages’, says Shapps

5 July 2011 | By Tessa Norman

Banks should offer ‘mates mortgages’ that allow groups of friends to buy a house together, housing minister Grant Shapps will say today.

At his second first-time buyer summit held today, Shapps will urge lenders to introduce mortgage products for friends, claiming this new type of lending will be a lifeline to young people struggling to get on the housing ladder, the Daily Mail reports.

He says: “If there are mates who are perfectly capable of paying monthly mortgage payments but are struggling to fund a deposit of their own, there should be straightforward options to unite with their friends and take the first step on to the housing ladder together.”

But industry commentators have raised concerns about the practicality of the proposals.

David Hollingworth, a mortgage specialist at London & Country, says mortgages for groups of friends would be full of risks.

And Melanie Bien, a director at Private Finance, says: “It is one thing to rent with friends, which is traumatic enough, let alone to get a mortgage with them.”

The majority of lenders will only lend to couples or same sex siblings, but Britannia is one of a small number that allows friends to buy together.

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Readers' comments (11)

John Lacy | 5 Jul 2011 10:19 am
We've been here before---it was a nightmare to unravel these sort of deals that took place in 1987 and 1988 and caused many in this category to be trapped in a situation that was no longer appropriate.
Mr Shapps should stick to what he understands and stop making an ass of himself
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Bobby | 5 Jul 2011 10:20 am
Clueless !. Its scary this bloke is in charge of solving the Country's housing problems.
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john | 5 Jul 2011 10:20 am
Apart from bringing out specific products this will make no difference as there is no bar to friends doing this already. As long as the legal ownership/joint tenants/tenants in common/ survivorship clauses are dealt with, there should b no major issues.

Maybe the fact that most cabinet ministers are millionares does distance themselves from the real issues.

As I have said for the umpteenth time, if the government (whoever it is) wanted to fix this, all they had to do was introduce the 80's and 90's style of MIG and underwrite the risk on behalf of the banks, allowing smaller deposit mortgages. Surely this knocks the rest of this pontificating on the head?
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Kevin Vella | 5 Jul 2011 10:27 am
Let's hope the 'mates' don't fall out over the next 25 years or find a spouse as this may cause problems!
The industry needs innovation but this is not practical. Mr Shapps would spend his time better developing deposit schemes to help first time buyers or helping parents of first time buyers with financial incentives to help their children.
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steve mcgill | 5 Jul 2011 10:31 am
dont mind this bloke - at least he's thinking outside the box.
he is quite prepared to put his head above the parapet - and seems to be exploring ways to make the banks lend
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Anonymous | 5 Jul 2011 10:35 am
Is Grant Schapps the worst Housing Minister ever? As Bobby said this guy is clueless.
Is he trying to distract attention from the changes to benefits that will leave thousands homeless? Despite denying this I couldn't help but notice that the govt are trying to change the laws regarding squatting.A coincidence? I don't think so.
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Robin | 5 Jul 2011 11:15 am
Further to anonymous and his 'thousands homeless due to benefits changes'. Stop reading the Guardian & Socialist Worker and accept these cuts are required if we are to stop being a 'parasite' nation of spongers. The next step is to start employing UK residents instead of immigrants, then we may become a more stable country & get back to business.
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robert lundon | 5 Jul 2011 12:36 pm
this can already be done in a joint mortgage why do we need another name for it but we always advise that many times this type can blow up in clients face because if one person cannot afford mortgage on their own what happens if the other gets up one day and leaves the bank/BS then own another property
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Iain | 5 Jul 2011 1:21 pm
"The next step is to start employing UK residents instead of immigrants, then we may become a more stable country & get back to business."

Can we all tell you to go back to reading the Daily Mail?
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Ron Radway | 5 Jul 2011 1:36 pm
Has this man never seen Judge Judy? Has this man no concept of human nature? Has this man any concept of how the mortgage product works?. Does he not understand the ramifications of "Joint & Several" Liability?
The questions are purely rhetorical, as, of course, the answer is no! How else will he have reached a position of influence & power, if not pontificating from a position of complete ignorance!
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