Following a crackdown by the UK regulator, there are currently no mortgage products available which let parents who are nearing retirement age buy a home jointly with their children, if they are of working age.
Last week a report found that house prices in the Island rose 7% last year and a Jersey family on an average income can no longer afford to buy a house of any type in the Island.
Peter Seymour, managing director of the Mortgage Shop, said that many Islanders now viewed a two-bedroom flat rather than a three-bedroom house as a family home.
Johnny Gough, head of sales and lettings at Andium Homes, the States-owned social housing developer, said that many Islanders had expressed an interest in inter-generational home purchases to help them find the right home, but the right products were not available for them.
‘We have had people approach us who might be aged around 60 years old and they might be interested in buying a property but because of their age they can’t get a mortgage,’ he said.
‘What they say to us is, could I buy a property with my kids? My kids are working, they want a place, so can we buy a place together? But this sort of shared scheme needs policy and products to be put in place. It would take government, lenders and Andium all working together.
‘We would very interested in doing this, as it could be a very big section the market.’
Mr Gough added that that there was currently no provision for inter-generational joint mortgages in Jersey and property contracts were also not geared towards joint ownership of that kind.
Mr Seymour said that it had become much more difficult for people nearing retirement age to buy a property following a UK review in 2014.
‘Four years ago the UK regulator carried out the Mortgage Market Review in response to the credit crunch,’ he said. ‘After this the ability, both onshore and offshore, of providers to lend money to people was totally controlled and they weren’t allowed to give people mortgages that went past their retirement age, which in Jersey is 67, if you are employed, and 70 if you are self-employed.
‘Before this quite a lot of people were taking out interest-only mortgages and planning to repay them on retirement. But this didn’t happen in millions of cases, hence the review.’
Mr Seymour said that denying older people mortgages was technically ‘age discrimination’, and shared mortgages could help thousands more people, including the younger generation, buy a home.
‘What we need is a product where, in the short term, the older member of the family is largely responsible for the mortgage until they retire,’ he said.
‘And when they reach the age of 67 or 70 the responsibility of that mortgage passes to the younger member of the family, who will hopefully be seeing their income levels improve over time.’
Mr Seymour added that he believed demand for this type of product could exceed that of the first-time-buyer market in Jersey.
‘The problem we would have then would be providing supply of housing to meet the demand,’ he said.
‘The States would need to become involved for the necessary framework to be put in place and it would need to be very carefully put together for lenders to be interested.’
