Home ownership schemes are ‘missed opportunity’
The Government’s plans to help first-time buyers get onto the housing ladder are a “missed opportunity”, according to the body that represents UK housing associations.
The National Housing Federation says the Homebuy shared equity schemes are neither affordable or sustainable for purchasers, nor viable for housing associations.
The schemes – Open Market, New Build and Social Homebuy – are part of the Labour government’s much trumpeted aim to help a million more people own their own home during its third term.
Under the Social Homebuy scheme, housing association tenants are eligible to buy a minimum 50 per cent stake of their home and pay rent on part of the remaining unsold portion.
But in its response to the Government’s consultation the federation says the 50 per cent stake is too high for the low-income families the Government wants to help.
It adds that because tenants would only have to pay rent on part of the unsold portion, the scheme is not financially viable for many housing associations, and they will be discouraged to participate.
The federation wants the Government to reduce the minimum share tenants are able to purchase to 25 per cent, and allow housing associations flexibility on the rent they charge on the unsold portion.
Danny Friedman, director of policy at the federation, said: “At present these plans are unworkable and are a real missed opportunity. The figures don’t stack up for residents, housing associations, lenders, and, ultimately, the public purse.
“Government plans to promote a new asset owning section of lower income households will fail unless the scheme is made more accessible and sustainable for low income households.”
The federation also expressed concern that participants in the new build and open market Homebuy schemes could end up with unsustainable levels of debt.
The Government is proposing to increase the rent on the unsold part of the property after five years, and the federation warns that this could make it more difficult for low-income families to meet their mortgage repayments.
It is worried this could lead to increased repossession and potential homelessness, and subsequently make it more difficult for low income families to obtain mortgages.
The consultation on extending the Homebuy schemes closes later this month.
Deputy Prime Minister John Prescott said when launching the consultation: “Social Homebuy will help tenants into partial home ownership and with the money they pay being used to reinvest in new social housing. This will make available sooner for families in temporary accommodation and on council waiting lists new homes.”
Other efforts to help first-time buyers have included raising the stamp duty nil threshold, meaning thousands more homeowners would not pay stamp duty when buying a house.
The Government also recently set out the next steps in its £60,000 house building challenge when it named the 33 organisations that will be progressing to the next stage of the competition, designed to tackle the shortage of low-cost properties.
