As part of a June announcement, the Right to Buy scheme was extended amongst other changes. More than 2.5 million people stand to benefit from this scheme that allows first-time buyers to get onto the property ladder.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
The other changes included in the announcement include: allowing people to put housing benefit towards mortgage repayments and excluding money saved in a Lifetime Individual Savings Account (LISA) for a housing deposit from benefits calculations. Along with that, plans for an independent review of the mortgage market were announced, in order to improve access to low-cost mortgages for first-time buyers with 5% deposits.
Moving from renters to homeowners
It’s a common argument when it comes to renting vs buying: many people could afford monthly mortgage payments, much like they can afford often sky-high rent payments, but the biggest obstacles are a deposit and strict lending restrictions. But at the moment, house prices show no sign of slowing down, and the ever-elusive deposit is only getting more unattainable.
How will this help?
Under current rules, if you live in a council house for a certain period of time, you are eligible to purchase the home at a discount of up to 70% of its market value. However, this is not the case for those who rent from a housing association. The Right To Buy scheme sets out to change that.
Who will benefit?
Aspiring first-time buyers stand to benefit as their chances of actually becoming homeowners will increase exponentially. Since the scheme launched in the ‘80s, more than two million people have purchased their council home through Right to Buy.
Full details on how the Right to Buy will work for housing association renters are not yet available, but the government has assured that it will work closely with the sector on how the scheme will work.
We do know that in an effort to ensure that the number of homes available to rent is not reduced because of the scheme, they have committed to building new social housing homes to replace each one that is sold.
Additionally, the government will now allow people to use housing benefits toward mortgage payments to help even more people to become homeowners. Previously, the approximately 1.5 million people who receive housing benefits could only use them to pay rent to housing associations or private landlords. The rule for Universal Credit will also be amended, enabling people to claim the benefit to save for a housing deposit. Current rules dictate that the money you can receive will be reduced if you have a savings of more than £6,000, and slashed to nothing if you have more than £16,000 in the bank. Finally, money saved in Lifetime ISAs will be exempt from this assessment, allowing more people to save for a deposit without losing any benefits.
Need help finding a mortgage as a first-time buyer?
Trying to get on the property ladder can be as exciting as it is stressful. To take some of the pressure off, discuss your mortgage options with the experts at Dental & Medical Financial Services.