Housing Association Right to Buy
In September 2019, the Government announced a new initiative to provide Housing Association tenants with the ‘right to buy’ the homes they live in. This was just the latest in a series of policies designed to help people on lower incomes who currently rent their properties from an approved qualifying body to get their first foot on the property ladder and create, through home ownership, an asset for later in life.
If you are currently renting your home from a Housing Association and want to know more about mortgages to fund buying a share in your home, then The Mortgage Centres are here to give you advice to set you on your way.
Who is their accommodation for?
By its very nature, Housing Association property is inclusive. Their housing is for anyone and everyone who faces difficulty or hardship in securing a place to live by themselves, for a variety of reasons. The whole reason for social housing is to make accommodation affordable and available for all who need it.
Traditionally, people making use of social housing have been those from vulnerable situations, such as disabled or elderly people, or those in low-income brackets needing Government support. However, in more recent times, as property prices have escalated, Housing Associations have increasingly helped younger people who may be struggling to save a large enough deposit for a home to find an affordable place to live through both ownership and rental schemes.
With council housing stock reducing in general, Housing Associations are often a vital resource of affordable rented accommodation. You will often find local authorities who are unable to supply affordable housing to people – either due to a lack of availability or supply, or because they don’t meet all the criteria – referring them to a Housing Association to meet their needs.
What type of schemes do housing associations offer?
When it comes to helping people afford their home, a Housing Association will normally either provide rented accommodation at a discount on the usual market rate, or help people to start buying their property on a Shared Ownership Right to Buy basis.
Shared Ownership is when a tenant or anyone who wants to get their first foothold on the property ladder can purchase a share of the accommodation rather than the whole property, with the balance share being still owned by the Housing Association. This allows people to invest an amount within their budget in a property and still live in a larger place than they would otherwise be able to afford.
For example, if the market value of a house was £250,000, then the buyers might be able to buy a 25% share for £62,500 or a 50% share for £125,000. This means they would only need to find a mortgage for these lesser amounts, and also that the deposit needed might only be as little as 5% of the value of their share of the property. They would then need to pay rent to the Housing Association for the remaining portion of the property, often again at a reduction on the typical market rate.