Fixed rent properties aimed at first-time buyers
The £400m scheme, to be announced today by communities secretary Eric Pickles according to The Times, will allow younger people who do not own a home to live in a new-build rental property on which the rent is fixed for seven years at 80% of the market value. At the end of that period, they will then have first refusal on buying the property.
Most of the properties involved will be one- or two-bed flats and houses.
The scheme is aimed at single people earning £33,000 or couples on £66,000 a year or less, although it will not be means tested. It is aimed at working people.
Pickles said: “The government is standing by people who work hard and do the right thing, and heling them move up and on in life.”
Local housing associations will be able to set their own exact criteria but will be expected to stick to centralised guidelines. They will be asked to bid for low-cost loans which can be used exclusively to build new homes to take part in this scheme. The government believes 10,000 new homes can be built using its £400m allocation by 2017.
Housing Associations will be given up to 16 years to repay the loans, and where properties are sold to tenants after seven years the proceeds must be used to build more homes. If a tenant is not in a position to buy their home after seven years, they have to move out and rent or buy another home outside the scheme, either on the open market or with the housing association.
Half the money will be directed at the London market, where property prices have increased by more than 11 per cent in the last year.
Matt Hutchinson, director of flatshare website SpareRoom.co.uk, said:
“In theory, the government’s rent to buy scheme is a good idea. The reality, however, is that even 10,000 homes won’t scratch the surface of a chronic supply problem that is severely impacting renters hoping to get onto the property ladder – particularly in London.
“Like Help to Buy it simply doesn’t go far enough. Announcing a new policy to help first time buyers is a handy short-term win for the government, especially with an election looming, but we need to fix the housing crisis for everyone, not just a lucky few.
“The government needs to think bigger and reach more people. In a climate of short term politics we need a government prepared to make tough decisions – the housing crisis could take a generation to fix.
“Doing more to encourage homeowners to rent out the estimated 15 million empty bedrooms in England alone would have a considerable impact on the supply of affordable rented accommodation for young people.”