The Prime Minister has announced that 2.5 million tenants who rent their houses from housing associations will be given the option to buy them outright.
He announced in a speech today that the popular Right to Buy scheme, which has made home ownership a reality for two million households since the 1980s, will be extended.
Currently, tenants in government homes can buy their homes at a reduced price of up to 70% off the market value, depending on how long they’ve lived there. For individuals who live in housing association-owned properties, however, the policy is less generous.
Extending the scheme could help up to 2.5 million tenants earn the right to buy, allowing them to become homeowners and make renovations to their homes as they see appropriate. On the scheme’s design, the government will collaborate closely with the housing association industry.
Because social housing will always play an essential role in our society, the Prime Minister has pledged to develop new social homes for every one that is sold.
According to the Prime Minister,
Nobody should be denied the opportunity to buy a home merely because of where they live now, just as no generation should be denied the opportunity to own a home because of when they were born.
For the past four decades, residents of council housing have been able to use a discount to purchase the place they call home.
Over that time, about two million people have been assisted in purchasing a home.
They’ve changed their identities and mindsets, going from being reliant on the government for every repair – from damp-proofing to a new front door – to having control over their own family home, able to make improvements and add value as they see fit.
To help more members of ‘Generation Rent’ become members of ‘Generation Buy,’ the government will launch an independent review of first-time buyer mortgage finance, with the goal of making it easier for this group by expanding access to low-cost, low-deposit finance such as 95 percent mortgages.
Currently, rising property costs, severe mortgage financing restrictions, and hefty deposit requirements are deterring many young people from pursuing their dream of owning a home. Over half of today’s renters could afford a mortgage on a monthly basis, but due to a variety of factors, only 6% could get a typical first-time buyer mortgage right away.
This will be the first complete review of the mortgage market in a decade, with the goal of identifying bold and innovative changes that the government and business can do to help more first-time buyers enter the housing market.
As the Prime Minister put it, “we have a ludicrous situation in which many younger people could afford monthly mortgage payments – they’re earning enough to cover astronomical rent bills – but the ever-increasing price of a house or flat has inflated deposit requirements to the point where saving even 10% is a wholly unrealistic proposition for them.”
First-time purchasers are attempting to reach an ever-changing target.
And, of course, the global rise in the cost of living is making saving even more difficult.
As a result, we want it to be simpler to obtain a mortgage.
The assessment, which will be completed this autumn, will look at how we can improve access to low-deposit mortgages for our country’s aspiring homeowners.
The Prime Minister has also promised to ‘convert benefits to bricks,’ modifying welfare regulations so that the 1.5 million individuals in work who are also on housing benefit can choose to put their money towards a mortgage instead of going straight to private landlords and housing associations.
The welfare system exists to provide a safety net for the poorest citizens, but the government also wants to encourage people to work and improve their lives.
As a result, if a hardworking family saves a deposit to buy a home, the government will provide them with the same housing assistance that they would have received for rent, but would be applied to their mortgage instead.
Today, we are extending the possibility of homeownership to millions more hardworking people across the country, said Levelling Up Secretary Michael Gove MP.
We are supporting first-time buyers, tearing down barriers to homeownership, and delivering on the people’s demands by extending Right to Buy and bringing forward the most comprehensive reform of the mortgage sector in decades.
At the same time, we will continue to replace every property sold in order to provide much-needed new, high-quality social housing.
The government will also tweak the criteria to encourage Universal Credit recipients to save for a deposit. Currently, when a claimant’s savings exceed £6,000, the amount of Universal Credit received is tapered, and it stops entirely when savings exceed £16,000.
We will promise to exempting Lifetime ISA funds from these limitations, allowing hardworking people to save a small amount each month for a deposit without affecting their Universal Credit payments, until they have saved enough for a first house deposit.
Thérèse Coffey, the Secretary of State for Work and Pensions, said:
For far too many people, the dream of owning a home has been dashed. By converting benefits into bricks, we are allowing those with the lowest incomes to acquire a home.
People on welfare will be incentivised to save for a deposit on a home by removing barriers and allowing them to contribute into a Lifetime ISA.
We’re also providing consumers the option of putting their benefit towards their mortgage rather than paying rent to a landlord who owns a buy-to-let property.
The government will also increase support for mortgage interest (SMI) – a loan that helps claimants pay interest on their mortgages and stay in their houses if they lose their jobs – to aid existing homeowners.
Currently, this only applies after nine months of unemployment, but the government plans to change that to three months in order to encourage people to look for job and to put the government in line with what lenders give in these situations.
Our goal to provide one million new homes by the end of this parliament will be pushed forward by the Levelling Up Secretary. More publicly owned brownfield land will be used and small sites will be opened, with priority given to critical employees and first-time buyers, in collaboration with local communities to develop the right houses in the right places.
Today, the Prime Minister underlined his commitment to putting an end to the scourge of unfair leasehold terms and giving leaseholders more control over their homes and lives.
The government will push for leasehold reform, including the ability for leaseholders to purchase their freehold, allowing 4.6 million people to own their own property for the first time. Discounts of up to 90% will be available for people who are trapped in excessive, increasing ground rentals.