Schemes to help lower income buyers
It's not surprising that since property prices have been growing quicker than our salaries, many of us can't afford to buy our first property or move up the rung of the ladder to the house we really need.
First time buyers in particular struggle to afford their first home. In addition to the current wage to house price ratio, it takes many people around five years to save up the 5% deposit and many young buyers are still paying off graduate loans. First time buyers are critical to the health of the property market though as they start most property chains and shunt everyone up the rungs.
The Housing Corporation is the national Government agency that funds new affordable housing and regulates housing associations in England. It was established to help people on low incomes to buy a property. Schemes include:
Key worker living
If you are a key public sector worker, such as a nurse or teacher, you could get help to buy a home as part of the Key Worker Living Programme. This applies if you are a first time buyer, or a homeowner needing to buy a larger property to meet your household needs (eg family sized homes) or you need to take part in shared ownership schemes.
There are two options: Open Market HomeBuy – where an 'equity loan' is provided for 25 per cent of the value of a home on the open market. This is a loan where the lender shares in any rise (and sometimes any fall) in the value of the property over the course of the loan. Half of the money comes from a participating bank or building society and the other half comes from the Government through a HomeBuy Agent. Key workers are expected to raise a mortgage for the 75 per cent remainder of the property's value. New Build HomeBuy allows eligible purchasers to buy at least 25 per cent of the cost of a home and pay a reduced rent on the remaining share. The programme is limited to key workers in certain areas.
Right to Acquire
The Right to Acquire is a scheme giving eligible tenants of registered social landlords (ie. the landlord is a housing association or housing company registered with the Housing Corporation) the legal right to buy the home they currently rent. The tenant must also meet certain criteria to qualify, e.g., they must have been a public sector tenant for a minimum period.
Shared ownership or equity scheme
Social HomeBuy (shared ownership) offers eligible tenants the chance to buy at least a 25% share of their home at a discount of between £9,000 and £16,000 depending on the location and the amount of share bought. They then pay up to 3% of the remaining value of the property in rent on a monthly basis. Not all local councils or housing associations offer the scheme so it is worth checking with the local council or housing association in your area.
Voluntary purchase
The Voluntary Purchase scheme provides eligible tenants of participating registered social landlords an opportunity to buy the home they currently rent at a discount of £9,000 to £16,000 depending on the property's location.