THE Government has said it intends to encourage more people on lower incomes to part-buy a home by tinkering with the rules on shared ownership.
Housing secretary Robert Jenrick MP claims the plans for a new national model on shared ownership will help thousands of lower earning households to make the leap onto the property ladder.
“Building the houses this country needs is a central priority of this government. We know that most people still want to own their own home, but for many the dream seems a remote one,” Jenrick said.
“My mission is to increase the number of homes that are being delivered and to get more young people and families onto the housing ladder, particularly those on lower incomes.
“That’s why I am announcing radical changes to shared ownership so we can make it simpler and easier for tens of thousands trying to buy their own home.”
The new model will make it easier to buy a slice of the dream, it is said. This includes allowing prospective part-homeowners the ability to increase their share of the property in 1% steps, rather than 10% as is currently the case.
Shared ownership involves buying a portion of a home with a mortgage and paying rent on the rest. In a process known as staircasing, people can buy further portions of the property as time goes by, all the way to outright ownership, with the rent decreasing accordingly.
The general ‘sell’ behind the shared ownership model is that it offers a lower cost route into owning a property — or at least a part of one. For some critics, however, it is little more than buying a more secure tenancy. Even so, shared ownership has grown considerably in recent years.
According to the Ministry of Housing, Communities & Local Government (MHCLG), explaining the revised model, a family buying a 25% share of a £150,000 two bed property would have a mortgage for £37,500 and pay a “subsidised rent” on the 75% they don’t own.
To buy further shares, the household would have to save £15,000 for each additional 10% share of the property. But under the Government’s plans, shared owners would only need to save £1,500 for each extra 1% they buy.
The housing secretary also said he will be looking to make reforms to the planning system to increase housing delivery and make home ownership “more affordable” for first time buyers, particularly in areas that are the least affordable. This could include an increase in the number of homes sold at a discounted price.
Changes will also be made to Help to Buy so that people buying a property through this scheme will find it easier to take out a 35-year mortgage.
The Government says it is also closing a “loophole” that prevented people from taking out a mortgage with a term of more than 25 years.
“Help to Buy, the cut to Stamp Duty and our home-building programmes are already making a real difference, but I am clear we need to go much further if we are to make the housing market work,” Jenrick added.
“I will be looking at ensuring young people from Cornwall to Cumbria aren’t priced out of their home areas and how we can build public support for more house building and better planning. This Government will help a new generation to own their home.”
The campaign group PricedOut wasn’t overly impressed, however, tweeting its response to Jenrick’s announcement: “This is one of a long line of Government schemes that make it look like they’re doing something on housing. The increased flexibility won’t hurt, but it also won’t help more than a small handful of people.”
Labour’s shadow housing minister, Sarah Jones MP, wasn’t impressed either. “Tinkering with the details of shared ownership is meaningless when lack of investment from Government means low cost homes for ownership simply aren’t getting built,” she said.
“The Tories have failed to deliver the low-cost homes we need to get people on the housing ladder. Just 1% of all homeowners have accessed shared ownership, and the number of these and other low-cost homes being built each year has almost halved since its peak under Labour.
“The Conservatives’ ‘affordable’ housing is increasingly out of reach for people on lower incomes. Labour will introduce a new affordability standard, with revolutionary new FirstBuy homes: discounted homes with mortgage payments set at no more than a third of incomes.”