The Government has admitted there is a massive problem in the UK with regards to affordable housing. House prices are higher than ever before and despite rumours of a fall in house prices in the next year or so potential buyers know they cannot rely on this happening. The Government needs to take action in order to prevent the house-buying culture in the UK from dying out. To do so it has come up with a number of initiatives that are aimed at helping would-be home owners to get on the property ladder.
Government Home Ownership Schemes
Current government initiatives include several schemes aimed at helping people buy their first property, including Social HomeBuy (for eligible social housing tenants), Shared Ownership, and the First Homes scheme.
What is Social Home Buy?
Social Home Buy is aimed at tenants (council or housing association) who are not eligible for the Right-to-Buy scheme i.e. because they have not been in the property long enough or because they cannot afford to buy the whole property. Social Home Buy allows the tenants to buy a share in the property meaning the own at least part of their home.
What is Shared Ownership?
Shared Ownership allows buyers who meet the eligibility criteria to buy a share (10%-75%) of a property and pay rent on the remaining share to the housing association or private developer that owns the building.
What are Current First-Time Buyer Schemes?
Current first-time buyer schemes include the permanent Mortgage Guarantee Scheme (which works behind the scenes with various lenders), the First Homes scheme, and Lifetime ISAs which provide government bonuses on savings.
Government Alone Partnership
With the product in partnership with the Government alone the borrower receives a loan from the Government of up to 17.5% of the purchase price. The borrower then gets a mortgage for the remaining cost of the property. Due to the equity loan from the Government the sum needed from the mortgage is less and therefore the buyer should find it easier to get a lender to lend the money.
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Government and Halifax/Advantage/Nationwide partnership
With the partnership with one of the private lenders the Government will offer a loan of up to 12.5% and the lender will offer the same giving the borrower a total equity loan of 25%. He or she then takes out a mortgage for the remaining amount.
Government and Yorkshire Building Society Partnership
With the partnership with Yorkshire Building Society the borrower will receive a loan of up to 15% of the property price from the Building Society along with 17.5% loan from the Government giving the borrower a total equity loan of 32.5%.
There is no interest on any of the loans but if the price of your house increases the amount you must pay back to the quity loan provider increases with it.
These products are ideal for borrowers who cannot afford to take out a mortgage for the full price of the home but want to own at least part of the house.
What is Right to Buy?
The Right to Buy scheme is another initiative from the Government aimed at helping council tenants to purchase their home. The tenants are given a discount on the purchase price in order to make the house more affordable.
How do I apply for the FTBI?
What other Key Worker Retention initatives are there available which will assist me to buy my present home?
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