Ray Boulger, senior technical manager at Charcol, said lenders will see the benefits of merging PIFs with shared-ownership schemes, which he believes will increase in popularity over the next couple of years.
Boulger explained: “With shared-ownership you are funding part of the property not owned by the purchaser on a purely commercial basis.
“Investors are not prepared to finance shared-ownership, partly because they will be recovering no income.
“It has to be based on capital gains but the danger of this is that the investor can only take a view of the income, rather than having any solid guarantee.
“The challenge is to find a way of providing funds to cover the funds on shared-ownership.
“The beauty of financing through PIFs is there will be no capital gains tax. The investor on average will pay tax at around 40 per cent but this will be a tax-efficient income.
“With an ordinary buy-to-let the investor would have to pay a letting agent as well as various other expenses. With shared-ownership, no letting agent is involved and the owner will pay all the utility bills and insurances.
“But you would have to get the rental level down to around 2 per cent to make it work,” Boulger said.
Boulger added that the government, through its Homebuy Scheme, would support this by taking as its return the capital gains without insisting on any rent.
Rob Clifford, managing director of Mortgageforce, agrees. He said: “Investors are interested in the benefits of shared-ownership.
“There are several ways PIFs may manifest themselves and they may very well gravitate towards shared-ownership.
“And PIFs will provide an opportunity for lenders to generate more market share and open up a new distribution channel through intermediaries.”
