Plans for a new national model for shared ownership have been unveiled by the Government which says it will help thousands of lower earners get onto the housing ladder.
Social tenants moving into new homes will be given the chance to buy a share and just a 10% minimum initial stake will be required, cut from 25% for all shared ownership homes. It will also allow people to buy their home in 1% chunks, rather than 10% at a time.
Housing Secretary Robert Jenrick said that the package of measures follow a review of the shared ownership sector with the aim of making it easier for people to buy more of their own home and in some areas it will mean people can get on the housing ladder with deposits as low as £2,000.
‘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,’ said Jenrick.
‘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,’ he added.
For tenants in new housing association properties, there will be an automatic right to buy a share of their home from as little as 10%, with the ability to increase that share over time, up to full ownership.
The Government will work with housing associations on a voluntary basis 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.
Currently a Housing Association tenant renting a £200,000 property cannot buy a share of that property. Under Right to Shared Ownership, the tenant 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.
The aim is for the new model for shared ownership to be more consumer friendly and affordable and will mean people are able to buy small chunks of their home. In the previous model consumers could face a costly or lengthy process when ‘staircasing’ including high valuation fees to determine the worth of the property.
These costly fees will be made fairer and proportional and we have consulted on introducing a new streamlined valuations process to help further reduce these costs and smaller share purchases should make it easier for people to save the money required to buy additional shares, removing the need to secure mortgage finance or pay fees to the lender.
If they do need a mortgage, it will be easier to get one and lenders are being encouraged to make mortgage finance available for this.
For those ready to move on before they reach 100% ownership, the resales process will be streamlined to make it even easier for them to sell their home.