The current process of ‘staircasing’ requires that people in shared ownership properties increase their share of the property in 10 per cent chunks – which can be as much as £45,000 a time. The plans see this reduced to chunks of just 1 per cent, making it easier for people to buy a greater share in their home.
A family in a £200,000 shared ownership 3-bedroom property could buy an initial 25 per cent stake with a mortgage for £50,000 while paying subsidised rent on the remainder. Instead of having to save up £15,000 at a time to increase their stake, they would be able to save up 1 per cent - £2,000 - at a time.
The Housing Secretary also announced he will look to reform the planning system to increase housing delivery and make home ownership more affordable for people looking to buy their first property, particularly in areas which are least affordable.
This could include increasing the number of homes sold at discounted prices to people trying to get onto the property ladder, boosting homeownership and helping build local support for new development.
Homeowners buying a property under Help to Buy will be given new freedoms which will make it easier to take out a 35-year mortgage, and a loophole preventing people from taking out a mortgage with a term of more than 25 years has been closed with immediate effect.
We support thinking creatively about ways to help first time buyers on to the housing ladder and consumers will welcome the opportunity to increase their share of ownership more easily and to simplify the process by which they can sell their homes.
Government must be careful of the unintended consequences that any changes to Help to Buy could have on the rest of the market as in many cases these are not properties that feed into the general market place but into a ‘cul de sac’ with no assistance to upward activity.
