Homebuyers using shared ownership to purchase a home will be able to buy a smaller share in their property to help them overcome affordability challenges, the government has announced this week.
Currently, people using shared ownership – where buyers purchase part of the property and rent the rest – must buy at least 25% of their home.
But under a new model announced by the Housing Secretary Robert Jenrick this week buyers will be able to purchase a minimum initial share of 10%.
After making the initial purchase, buyers could then go on to buy additional shares in their home at 1% instalments with heavily reduced fees to enable to them own more of their property in the future.
There will also be a 10-year period for new shared owners where the landlord would cover the cost of any repairs and maintenance
And a ‘Right to Shared Ownership’ will become available to the ‘vast majority’ of rented homes delivered through the new programme, providing tenants with a pathway into ownership by giving them the right to purchase a stake in their home.
What’s more, the housing secretary also launched a consultation to consider how best to raise accessibility standards for all new homes in recognition of the importance of suitable homes for older and disabled people.
Affordable homes funding
The new model was announced by Jenrick as part of a new £11.5 billion Affordable Homes Programme due to be delivered over the next five years to provide 180,000 new homes across England.
Half the homes will be available for affordable home ownership in a bid to help more first-time buyers gain a foothold on the property ladder.
Jenrick said: “This government is helping hard-working families and prospective first-time buyers get their feet on the housing ladder in an affordable way.
“Thanks to the range of flexible ownership options being made available, more families across the country will be able to realise their dreams of owning their own home, with half of these homes being made available for ownership.”
Support for first-time buyers
The measure comes just after the government axed stamp duty on properties under £500,000 until March 2021 and extended the Help to Buy scheme to allow more people impacted by the closure of the housing market during lockdown to benefit.
Craig McKinlay, new business director at Kensington Mortgages, said the changes to the Shared Ownership scheme demonstrated the government was pushing more policy changes to boost the housing market.
“The changes, such as a reduction in minimum share, will help first-time buyers onto the ladder at a time when deposits and lending are being tightened,” he said.
“And being a permanent move, instead of temporary measures like the former two, this means the changes should help avoid a double cliff when these come to an end.
“The mortgage industry as a whole needs to pull its weight, and develop innovative solutions at a time when borrowers need more help than ever getting into their first home.”
You can find out more about shared ownership by clicking here.
