The Prime Minister has announced 2.5 million tenants renting their homes from housing associations will be given the right to buy them outright.
Two and a half million tenants renting their homes from housing associations will be given the right to buy them outright, the Prime Minister has announced.
In a speech, he has confirmed an extension of the popular Right to Buy scheme, which has made homeownership a reality for two million households since the 1980s.
Currently, tenants in council homes are eligible to buy their homes at a discounted price, up to 70% off the market value depending on how long they have lived there. However, the scheme is less generous for those in homes owned by housing associations.
Extending the scheme could benefit up to 2.5 million tenants who would gain the right to buy, freeing them up to become homeowners, and add value and make improvements to their homes as they wish. The Government will work closely with the housing association sector on the design of the scheme.
Social housing will always play an important role in our society, so the Prime Minister will also commit to the building of replacement social homes for each one sold.
In order to turn more members of ‘Generation Rent’ into ‘Generation Buy,’ the government will also launch an independent review of access to mortgage finance for first-time buyers, with the aim of making it easier for this group by widening access to low-cost, low-deposit finance such as 95% mortgages.
Currently, soaring house prices, stringent mortgage lending restrictions, and high deposit requirements are hampering the ambition of many young people who want to own their own homes. Over 50% of today’s renters could afford the monthly cost of a mortgage but various constraints mean only 6% could immediately access a typical first-time buyer mortgage.
This will be the first comprehensive review of the mortgage market for a decade, seeking bold and innovative steps that Government and industry can take to support more first-time buyers in homeownership.
The Prime Minister has also pledged to turn ‘benefits to bricks’ – changing welfare rules so that the 1.5 million people who are in work but also on housing benefits will be given the choice to use their benefit towards a mortgage, rather than automatically going directly to private landlords and housing associations.
The welfare system exists as a safety net to help the poorest people, but the government also wants to incentivize people to find work and take steps to better their lives.
So if a hard-working family saves a deposit to buy a home, the government will back them with the same housing support that they would have used on their rent, to pay towards their mortgage instead.
The government will also change the rules to incentivize those who are claiming Universal Credit to save for a deposit. Currently, welfare rules taper the amount of Universal Credit received when the claimant’s savings exceed £6,000, and it stops entirely when savings exceed £16,000.
We will commit to exempting Lifetime ISA savings from these rules – meaning hard-working people can save a little each month specifically for a deposit without impacting their Universal Credit payments until they have enough for a deposit for a first home.
To support existing homeowners, the government will also improve support for mortgage interest (SMI) – a loan that helps claimants pay interest on their mortgages and stay in their homes if they lose their jobs.
Currently, this only kicks in after nine months of unemployment so the government will bring this forward to three months, to incentivize people to find work again and bring the government into line with what lenders offer in these circumstances.
The Levelling Up Secretary will push forward our commitment to deliver 1 million new homes by the end of this parliament. Working with local communities to build the right homes in the right places, more publicly owned brownfield land will be used and small sites unlocked, with priority given to key workers and first-time buyers.
The Prime Minister has today also reaffirmed his commitment to end the scourge of unfair leasehold terms to give leaseholders better control over their homes and lives. The government will drive forward leasehold reform, including the ability for a leaseholder to buy their freehold – helping 4.6 million households genuinely own their own home. This will include discounts of up to 90% for those trapped with egregious, escalating ground rents.
The Prime Minister said:
Just as no generation should be locked out of home ownership because of when they were born, so nobody should be barred from that same dream simply because of where they live now.
For four decades it has been possible for council home tenants to use a discount to buy the property they live in. Over that time almost two million people have been helped to home ownership.
They have switched identities and psychology, from being dependent on the state for every repair – from damp-proofing to a new front door – to be in charge of their own family home, able to make improvements and add value as they please.