fbpx

Right to buy extension to make home ownership possible for millions more people

Right to buy extension to make home ownership possible for millions more people

The Prime Minister has announced that two and a half million tenants renting their homes from housing associations will be given the right to buy them outright.

In a speech on 9 June 2022, he has confirmed an extension of the popular Right to Buy scheme, which has made home ownership a reality for two million households since the 1980s.

Currently, tenants in council homes are eligible to buy their homes at a discounted price, up to 70 per cent off the market value dependent on how long they have lived there. However, the scheme is less generous for those in homes owned by housing associations.

Extending the scheme could benefit up to 2.5 million tenants who would gain the right to buy, freeing them up to become homeowners, and add value and make improvements to their home as they wish. The Government will work closely with the housing association sector on the design of the scheme. Social housing will always play an important role in our society, so the Prime Minister will also commit to the building of replacement social homes for each one sold.

Eddie Hooker, CEO of Hamilton Fraser’s thoughts on the announcement of the extension:

“As always, the devil will be in the detail and the key to this will be to ensure that housing association stock is not depleted for the more vulnerable people in our society.

Mortgage assistance for first time buyers is well overdue and very welcomed.  We know that many young people are stuck paying rents far higher than mortgage payments for comparable housing due to the restrictive practices of mortgage companies who just won’t lend the required multiple of salary to purchase their first home.”

Extending the scheme could benefit up to 2.5 million tenants who would gain the right to buy, freeing them up to become homeowners, and add value and make improvements to their home as they wish. The Government will work closely with the housing association sector on the design of the scheme. Social housing will always play an important role in our society, so the Prime Minister will also commit to the building of replacement social homes for each one sold.

“Just as no generation should be locked out of home ownership because of when they were born, so nobody should be barred from that same dream simply because of where they live now. For four decades it has been possible for council home tenants to use a discount to buy the property they live in. Over that time almost two million people have been helped into home ownership.

They have switched identities and psychology, from being dependent on the state for every repair – from damp-proofing to a new front door – to being in charge of their own family home, able to make improvements and add value as they please.”

– Boris Johnson, Prime Minister 

In order to turn more members of ‘generation rent’ into ‘generation buy’, the Government will also launch an independent review of access to mortgage finance for first-time buyers, with the aim of making it easier for this group by widening access to low-cost, low-deposit finance such as 95 per cent mortgages.

Currently, soaring house prices, stringent mortgage lending restrictions and high deposit requirements are hampering the ambition of many young people who want to own their own home. Over 50 per cent of today’s renters could afford the monthly cost of a mortgage but various constraints mean only six per cent could immediately access a typical first-time buyer mortgage.

This will be the first comprehensive review of the mortgage market for a decade, seeking bold and innovative steps that the Government and industry can take to support more first-time buyers into homeownership.

“We are extending the opportunity of homeownership to millions more hardworking people across the country. By extending Right to Buy and bringing forward the most comprehensive review of the mortgage market in decades, we are backing first-time buyers, breaking down barriers to homeownership and delivering on the people’s priorities.

At the same time, we will continue to deliver much-needed new, good quality social homes by replacing each and every property sold.”

Michael Gove MP, Levelling Up Secretary

Read more on the announcement on our partner, LandlordZONE’s website.