The government has revealed its plans for a new shared ownership scheme which aims to get tenants on to the housing ladder from as little as £2,000.
Tenants who are in new housing association properties will be given an automatic right to buy an initial share of their home from as little as 10% and over time, increasing that share to full ownership.
According to the government, a housing association tenant renting a £200,000 property could buy an initial 10% stake worth £20,000, while paying subsidised rent on the remaining 90% of the property. The tenant could make up this 10% stake through a £2,000 deposit and a £18,000 mortgage.
In an announcement today, the government said it will work with housing associations to determine what offer can be made to those in existing housing association properties, so that the new Right to Shared Ownership is extended as widely as possible. In addition to this, further measures to make all shared ownership homes more affordable have been confirmed. This involves cutting the minimum initial stake from 25% to 10%, giving those on lower incomes the chance to own a stake in their property.
The new model will also allow people to buy their home in 1% increments, rather than having to save up 10% at a time, and will reduce the fees charged.
Mark Hayward, chief executive of NAEA Propertymark, shared his thoughts: “Now that the measures on shared ownership have been confirmed, thousands of consumers will welcome the opportunity to increase their share of ownership more easily and to simplify the process by which they can sell their homes.”
However, he also cautioned: “Whilst we support introducing creative ways for consumers to get on to the housing ladder, the Government must be careful of the unintended consequences that any changes to Help to Buy could have on the rest of the market. In many cases these are not properties that feed into the general market place but into a cul de sac with no assistance to upward activity.”
Robert Jenrick, Housing secretary, had this to say: “Many people want to own their home, but can’t see a route towards achieving that goal. This government is determined to help people realise that ambition and boost ownership for thousands of hard-working people up and down the country.
Owning a home is not just about the four walls around you, it’s about investing in your family, saving for the future and putting down roots in a community.
These measures announced today will mean more people, including residents living in new housing association homes, are given the opportunity to get on to the housing ladder.”