Struggling families who are just about able to keep up with their rental costs will get the chance to purchase their property, after 25 years of paying rents.
This new proposal, entitled, ‘buy as you go’ is expected to be announced during a wider revamp of the housing market towards the end of this month. Buyers will not require to have paid a deposit or require a mortgage. Instead, they will build up equity in their homes over time.
Housing
This policy is due to be unveiled in the Chancellor’s Autumn Statement. It is believed that the National Housing Federation has informed ministers that housing associations will be able to purchase 335,000 homes in the next four years. This will include a substantial number on a ‘buy as you go tenure’, if additional funding is provided.
Proposed rents paid by people in ‘buy as you go’ would be roughly 90% of the market rate in the local region. The split between rent and equity payments would change over time, until the tenant is in a position to own outright.
Private renters normally pay around 47% of their take-home pay to their landlord. This means that a large number of would-be homeowners on a low wage have little or no chance of saving for a deposit.
A recent report has revealed that tenants in the capital face a 25% increase in rents over the next five years. The average interest in the rest of the country is due to be around 19%.
Priorities
Top Government sources said that Downing Street is determined to improve the chances of long-term renters owning their own property.
This proposal comes as Labour has released new figures which indicate that the fall in homeownership seen since 2010 has been worst for those in the north of England.
Data from the Government’s English Housing Survey indicates that between 2010 and 2015, the number of homeowners in the north of England has fallen by more than 130,000.
This problem has been particularly prominent in younger households in the North, with 90,000 fewer homeowners under 45 recorded in Yorkshire, and 100,000 in the North-West.
‘Buy as you go’ plan to make renters homeowners
Failures
Shadow housing secretary John Healey, noted: ‘Six years of failure on housing under the Tories have meant a big drop in homeownership for young people right across the country, with the fall sharpest in the north of England.’[1]
‘This is no longer just a problem for London and the south-east, but a national problem that requires new national leadership. Short-term gimmicks from Conservative ministers over the last six years were too often designed to give the Conservatives a poll boost rather than real support to first-time buyers on ordinary incomes. Young people are now paying a price for this failure,’ he added.[1]
Young people are now paying a price for this failure,’ he added.[1]
[1] https://www.theguardian.com/society/2016/nov/05/rising-rents-force-housing-policy-change-homes-tory