The Government has today announced measures to make it easier for first time buyers to purchase their first home, with notable changes to shared ownership homes and the Help to Buy scheme.
The Ministry of Housing, Communities and Local Government has said it will review 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. This step 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.
At present, buyers must buy an increased share in 10% chunks, which can be as much as £45,000 per time. This process of increasing the stake until the property is bought outright is known as “staircasing”. People use shared ownership to buy a proportion of their home – which can be as little as 25% – and then pay a subsidised rent on the rest.
Housing Secretary Rt Hon Robert Jenrick MP said:
“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. 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.” 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.
“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 Housing Secretary also announced he will look to reform the planning system to increase housing delivery and make home ownership more affordable for people looking to buy their first property, particularly in areas which are least affordable.
This could include increasing the number of homes sold at discounted prices to people trying to get onto the property ladder, boosting home ownership and helping build local support for new development.
Homeowners buying a property under Help to Buy will be given new freedoms which will make it easier to take out a 35-year mortgage, in measures announced today.
The government has also today closed a loophole that prevented people from taking out a mortgage with a term of more than 25 years. Under the changes, which are taking effect immediately, people will have the freedom to reduce their monthly mortgage repayments by spreading their borrowing over a longer period.
The move reflects change in the wider mortgage market, where the number of first-time buyers taking out a mortgage of more than 30 years has doubled in the last decade. At present, when re-mortgaging after 2 or 5 years at the end of a fixed rate period, Help to Buy homeowners cannot in practice take out a mortgage that goes on for more than 25 years after the original property purchase date.
Welcoming the changes, Suella Braverman MP said:
“Shared ownership and Help to Buy are very popular schemes, so I welcome these latest steps to make it easier for more first time buyers to purchase their own home.
“Our younger generation are finding it much harder to buy a house than previous generations, and it’s important that schemes and interventions are in place to make it easier for young people to buy their first home, from owning a share of their home or borrowing under the Help to Buy scheme, to having their stamp duty waived and having access to discounted homes earmarked for local people in their community.”