- Plans for a new national model for shared ownership will help
thousands of lower earners step onto the housing ladder
- Social tenants moving into new homes will be given the chance
to buy a share
- Just a 10% minimum initial stake will be required, cut from
25% for all shared ownership homes
- Plans to allow people to buy their home in 1% chunks – rather
than 10% at a time
A package of measures to help people on lower incomes get onto
the housing ladder have been confirmed today by Housing Secretary
Robert Jenrick today (17 October 2019).
As announced over the summer, the government is reviewing a new
national model for shared ownership to make it easier for people
to buy more of their own home, including allowing them to buy in
1% increments.
These measures are today being confirmed, giving thousands of
social tenants an opportunity to purchase a stake in their home.
In some areas, this will mean people can get on the housing
ladder with deposits as low as £2,000.
This will help to fulfil the Prime Minister’s priority to level
up the whole country, closing the opportunity gap and helping
millions of young people into home ownership.
Housing Secretary said:
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.
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.
In August 2019, the government first announced a new national
model for Shared Ownership, which proposed significant changes to
help people to buy further shares in smaller increments - for
example, of 1% or more - and to cut the fees charged.
How will this work?
Right To Shared Ownership
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.
A new model for shared ownership
This will form part of the government plans to improve the
overall model for shared ownership - making it easier for the
public to save and buy equity in their home – so-called
‘staircasing’.
The new model will be more consumer-friendly and affordable and
will mean people are able to buy small chunks of their home – in
some areas for as little as £2,000 - in a simple, quick process.
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.
Smaller share purchases will 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, we want to make it easier to get one
and will be introducing a preferred national model for shared
ownership and encouraging more widely available mortgage finance.
For those ready to move on before they reach 100% ownership, we
are streamlining the resales process, to make it even easier for
them to sell their home.
