Housing association tenants will be given access to the finance they need to get a foothold on the property ladder following the launch of a new £200 million Government scheme.
The pilot, in the Midlands, comes after an historic voluntary agreement between the National Housing Federation (NHF) and the Government which will eventually give 1.3million tenants the chance to achieve their property-owning dreams.
The scheme, which was launched on Thursday (16th August), gives large discounts of up 50% on price of their home, for individuals and families who’ve been living in the property for more than three years.
Pete Ball, pictured, personal finance CEO at the specialist lender Together, said there was a demand from housing association tenants who would be eligible for the new scheme.
He said: “This is a fantastic opportunity for hard-working families – many who have rented their homes from housing associations for years – to be able to own them outright for the first time.
“We can help by providing right to buy mortgages for those who are often underserved by mainstream banks and building societies. For example, borrowers may be self-employed or reaching retirement; they may want to buy a house made of concrete or a flat more than six floors up and could struggle to get a mortgage in such situations.”
He added: “Home ownership plays a vital role in social mobility, and the financial security needed for people to build a future. We’re excited to be helping housing association tenants do this under the voluntary Right to Buy scheme to give them the opportunity to realise their dreams.”
Guidance was issued in May by the NHF to associations taking part in the latest pilot and a House of Commons briefing document about voluntary RTB was published last month.
Nearly 20 housing associations in areas including Birmingham, Nottingham, Leicester and Stafford have already signed up to the voluntary scheme, which follows an earlier pilot of five associations in 2016. The government has said that any properties bought under the scheme will be replaced like-for-like.
Who is eligible?
Tenants may be eligible to buy under the new scheme if they have lived in a property owned by a social or affordable housing association for at least three years. They can also apply with up to three family members, if the property is their main home and they have lived there for 12 months or more.
Those who meet the government’s eligibility criteria will be entitled to a Right to Buy discount. Tenants living in houses will get a 35% discount (50% discount for flats) on the price of the property, if they have been a public sector tenant for three years. After five years the discount increases by 1% for every year up to a maximum of 70% or £80,900, whichever is lower.*
For example, Mr Smith has lived in a two-bedroom flat, valued at £110,000, for 25 years. He will be eligible for a 70% discount – or £77,000 – meaning he will pay just £33,000 for the property.
Mortgage borrowers can use their discount as a deposit, so they can borrow up to 100% of their purchase price, excluding non-refundable mortgage fees.