Connells launches shared equity deal to boost sales

Connells has launched its own initiative to help boost sales volumes and kick-start the housing market.

Called ValueShare, the scheme allows buyers to pay just 75% of the purchase price of their prospective home at the point of sale and defer payment of the remaining 25% for a maximum of 10 years.

Buyers can opt to pay the 25% as an interest and penalty-free lump sum or when they sell the property, so long as the amount is paid in full within the 10-year time frame. There is no option to stagger repayments.

Buyers will pay 25% of the property value at the point of repayment, based on a mutual agreement with the seller. Buyers and sellers can agree on the price of one valuation or on an average price of two valuations. Solicitors will manage the repayment

Sellers retain a 25% second-charge loan on the property until the balance is repaid in full.

Connells' group chief executive, David Livesey (pictured), acknowledges the risk faced by vendors, particularly in the event of repossession.

"If there's a repossession, the mortgage lender is in pole position to recover any proceeds of the sale but technically the vendor is still owed 25% of whatever the property sells for.

"Therein lies the risk to the vendor - they may not get all of their money back because of the second charge."

Livesey says the agency has signed mortgage deals with a range of lenders, with some prepared to offer mortgages to cover the full 75% loan buyers require at the point of sale, with others only prepared to lend around 90% of the 75% stake.

David Lovitt, branch manager of Darlows (Spicerhaart) in Cardiff, says: "In principle it sounds like a good idea but who wants to retain 25% of a property knowing that there's a risk if the buyer defaults on their mortgage?

"It's too complicated and it's dangerous. I think people selling at the moment would rather take a hit on the price and walk away."

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