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Brokers shut out by Help to Buy crackdown

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Brokers have expressed frustration at a clampdown by the Homes and Communities Agency which effectively cuts them out of the loop when advising clients on the Help to Buy Equity Loan scheme.

The HCA says that, as a result of fraud and data protection risks, brokers should not be informed of the ongoing progress of a client’s application for an equity loan.

Similarly only the client, housebuilder and solicitor should be informed when application to proceed with the loan is granted.

Until the recent clampdown many brokers had been involved in the entire process since 2013, but Mortgage Strategy understands that this was the result of misinterpretation of the rules by some Help to Buy agents.

These agents are not directly employed by the HCA, but are appointed by the agency to administer applications.

An HCA spokesman says: “Our contract with the Help to Buy agents, which sets out the data protection security requirements has always been very clear. For data protection reasons, the ATP documents should only ever be issued to the buyer, the developer and the buyer’s solicitor.

“We send reminders every so often to reinforce what the obligations are as per the Help to Buy contract.”

Regardless, brokers hit back and say the rule is damaging to consumers.

Sands mortgage and protection specialist Gary O’Neil says: “The new system will cause unnecessary delays and will ultimately be a bad experience for the consumer. With new build homes especially, you’re looking at a 28-day exchange, brokers possess the skills and qualifications to get through this process accurately and efficiently.

“Forcing consumers to go direct will cause delays which ultimately could result in customers losing out on their dream home.”

He adds that under the existing regulations, HCA local representatives get help and support from brokers, but the new rules will see them bombarded by extra work.

Brokers are also taking issue with the perceived lack of trust on the part of the HCA.

John Charcol senior technical manager Ray Boulger says: “I can only assume they think there are some fraudulent brokers out there and those brokers should be reported to the FCA.

“But there are some fraudulent solicitors out there too. Even if they are doing this as the result of one or two bad apples, it is not the right solution. Those brokers should be reported to the FCA.”

Chadney Bulgin mortgage partner Jonathan Clark says brokers and advisers cannot effectively defraud the process in any case.

He says: “When arranging Help to Buy mortgage applications on behalf of my clients in the past, most developers have been very happy for me to complete the ATP on their behalf.

“At this stage, none of the information is checked. So whilst it would be a simple matter for a broker to mis-represent the information, it’s hard to see why they would want to do this, as, of course, the application would then be thoroughly assessed by the lender”.

However, Mortgage Advice Bureau new homes relationship manager James Chidgey says the news is not as bad as it first seems, insisting that brokers can still be very much involved in the process.

Chidgey says, “I can completely understand the bewilderment and frustration brokers will have with this. Some of our members have written in asking about it. It is disappointing for brokers that this has been going on for three and a half years and suddenly it gets pulled.

“But all is not lost. The adviser is still in a position to assist the customer apply for the authority to proceed for the application for Help to Buy funds. And the broker will eventually get an email from the Help to Buy agent saying that the authority to proceed has been issued. So it’s perhaps not as bewildering as it first seems.”

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  • Chris Hulme 30th August 2016 at 1:26 pm

    That’s fine then if its only a Data Protection issue on the contract. We will simply obtain a Signed Letter of Authority from our client and submit it to HCA agents with the application for HTB funds. Yes it’s a ridiculous stance by HCA (and probably not one we should be at all surprised about given the track record) but we will still be there for our clients sporting them to the hilt through these onerous processes.

  • Martin Fairchild 30th August 2016 at 9:42 am

    Typical of the HCA to make life difficult for everybody. All they have to do is change the contract to include brokers.

    Some of the stupid schemes they’ve come out with in the past without thought or opinion of those on the front line does make me cringe. Some of us remember the Expanded Open market Homebuy scheme. Those involved with affordable housing had a meeting where we told them it was a stupid scheme but their response was “it’s coming, we need to make it work”. The scheme disadvantaged everybody that entered it!

    • Anonymous 30th August 2016 at 10:18 am

      Since we are on the topic of New Build development issues. I have a big problem with my local Persimmon Home development. I have had 2 clients (one of them my daughter) who have approached their sale office regarding buying and have been told in no uncertain terms that they have to use Persimmon’s nominated mortgage broker firm based in Nottingham (about an hour away).
      I challenged the sales adviser about this saying what is the problem with applicants being validated by their own local broker – what is the difference?
      She initially started to say that not every broker is experienced in New Build – which I am – and they have had problems with brokers who got it wrong. I continued to press the point and she actually said all applicants need to be validated by our broker or I cannot apply any applicable incentives that may be available on particular plots. I said why not – she said it is company policy and I would lose my job if I allowed this to happen. I said what about consumer choice for their mortgage – why should they use a broker they don’t know and who is based miles away – Its company policy, I am not trying to poach your clients she said – No but they are making damn sure the clients have no choice if they want to get their incentive package which could be stamp duty paid, £500 towards legal fees.
      Surely this stance must be against Consumer protection laws – can anyone else relate to this.

      Richard Scott