Getting that first step on the property ladder can be more challenging than ever before, with soaring house prices, rising interest rates, and wages failing to keep pace with the cost of living. Now, Prime Minister Boris Johnson has announced new measures designed to offer a helping hand to those on lower incomes.
The fine details will be revealed in the Autumn statement, but so far, we can expect to see the Right to Buy Scheme extended to include housing association tenants, which could potentially mean some 2.5 million people. At the moment, it is mainly designed to help council house tenants.
Furthermore, Johnson announced that people who are in low-paid jobs, and claim housing benefit or Universal Credit to top up their wages, will be able to use their benefits to pay towards a mortgage. This will make it easier for thousands more people to get approved for a mortgage, as currently, lenders will not take benefit payments into account.
The rules will also be changed to make it easier for people to save up for a deposit, even if they do claim Universal Credit. At the moment, you are unable to claim benefits in most circumstances if you have savings of over £16,000, and the amount you can claim reduces once your savings climb above the £6,000 mark.
Under the proposed changes, people will be allowed to put savings into a Lifetime ISA, which are tax free savings accounts designed to help younger people save up for a deposit, without it impacting on the amount of benefits they can claim. This will provide an extra incentive for those in low paid work to continue to make the effort to save.
In a recent speech in Blackpool, Boris Johnson said: ‘I want us to deliver on the long-standing commitment, made by several Governments, to extend the Right to Buy to housing associations. There are still 1.6million households living in council homes, but there are now 2.5million households whose homes belong to housing associations.’
He added: ‘It’s time for change. Over the coming months, we will work with the sector to bring forward a new Right to Buy scheme. It will work for tenants, giving millions more the chance to own their home.’
‘It will work for taxpayers, responsibly capped at a level that is fully paid for and affordable within our existing spending plans and for one for one replacement for social housing that is sold.’
The Right to Buy scheme, which was introduced by Margaret Thatcher in 1980, has helped over two million former council tenants to buy their own home. It works by offering tenants in England who’ve had a public sector landlord for three years or more the chance the buy the home at a significant discount of the market price.
This can be up to 35% of the total value for houses, and 50% for flats. The discount increases by 2% for every year after five years of occupancy, with a maximum cap of £87,000, or £116,200 in London. Under the new proposals, housing association tenants will also become eligible.
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