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Changes to Affordable Home Ownership

Shared Ownership allows people to buy a share of a home – rather than the whole house – and then buy a greater share over time as they can afford to. They pay rent on the rest of the property.

Previously, these were allocated in several different ways, including criteria set by local councils. For example, whether potential buyers worked in the local area or if they were already in council housing. This now has changed.

We’ve asked one of our panel mortgage advisers, De Havilland Group Limited, to discuss the Government's recent announcement of the following measures to boost affordable home ownership.

Shared Ownership rules relaxed

Shared Ownership limits have been lifted 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 applies across England.

You can buy a share 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.

London Help to Buy

Help to Buy Equity Loans were already open to both first-time buyers and home movers on new build homes in England with a purchase price up to £600,000.

Previously, if you were able to pay at least 5% of the value of your home as a deposit, the government would lend you up to 20% of the rest of the value of the property, alongside your mortgage of up to 75%. Now, if you live in London, the government

Equity Loan will now be available until 2021. And, to reflect the current property market in London, from early 2016 the government increased the upper limit for the equity loan it gives new buyers within Greater London from 20% to 40%.

With London Help to Buy equity loan:

  • you’ll need to contribute at least 5% of the property price as a deposit
  • the government will give you a loan for up to 40% of the price
  • you’ll need a mortgage of up to 55% to cover the rest

First-time buyers' discounts

Starter Homes are new build homes available at 20% off the market price. They are only open to first-time buyers under 40 and on homes where the discounted price is less than £250,000 outside London and £450,000 in London. £2.3 billion will be spent on building 200,000 Starter Homes over the next five years.

This money will be given to house builders to provide a 20% discount on new homes.

Property investors to subsidise first-time buyers

Since 1 April 2016 people purchasing additional properties, such as buy-to-let properties and second homes, pay an extra 3% in stamp duty. This way, money raised from tax on people buying their second home will be used to help those struggling to buy their first home.

Housing association tenants able to buy their homes

Previously, most people who rent a council home had the right to buy their home from the local authority. There were discounts on the home price available in many cases, depending on how long people had lived there.

Right to Buy will now be extended to housing association tenants during 2016, giving 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.