The government has introduced a series of new measures to help more people buy their first home.
One of the main changes will reduce the restrictions on who can buy a home through shared ownership.
Shared ownership is a scheme that allows people to move into a home by simply buying a share of it and paying rent on the part that they don’t own. They can then buy a greater share over time as their finances improve.
At the moment, these homes are allocated in several different ways depending on criteria set by local authorities. For example, potential buyers may have to work in the local area or already be living in council housing.
From April this year, Help to Buy Shared Ownership will remove these limits so that anyone who has a household income of less than £80,000 outside London, and £90,000 inside London, can buy a home through shared ownership.
Only military personnel will be given priority over other groups. The scheme will apply across England.
People can buy a share of between 25% and 75% of a home. The rent on the rest of the property won’t be more than 3% of the amount left.
For example, on a house worth £227,000 where the buyer has bought a 40% share, the rent won’t be more than 3% of the remaining 60% – in this case £4,000 a year, or £340 a month.
The government has also announced that it is extending the Help to Buy Equity Loan scheme until 2021. Under this scheme, if you’re able to pay at least 5% of the value of your home as a deposit, the government will lend you up to 20% of the rest of the value of the property, alongside your mortgage of up to 75%.
To reflect the housing market in London, new buyers there will be able to get equity loans of up to 40%.
The other major changes this year is that Housing Association tenants will be able to buy their homes, at discounted prices, putting them on par with tenants in council accommodation.
This extension to Right to Buy will give 1.3 million households the chance to become home owners.
A small number of housing associations will be piloting the scheme in the next few months.
Please contact us if you would like more information about the legal aspects of buying and selling a property.