HomeBuy details revealed
Thursday, 11 Aug 2005 12:26
The government's HomeBuy scheme will help 100,000 onto the property ladder
First-time buyers, social tenants, and key workers will receive a helping hand onto the property ladder under the government's HomeBuy scheme, unveiled today.
The new plans will allow people to buy a percentage of a home rather than the full cost, with a housing provider making up the difference.
For example, a first-time buyer, under the new Open Market HomeBuy plan, need only fund 75 per cent of the value of a home themselves. The rest of the purchase price will be provided by a housing provider - although there may be a "small annual charge" on this, the government said today.
After purchasing a percentage of their home, the buyer will be able to increase their ownership gradually over time, in blocks of ten per cent of the value of the property.
When a home bought under the new schemes is sold, the buyer will receive the same percentage of the value of the property as they own. That is to say that if they own 65 per cent of the property, then when it is sold they would receive 65 per cent of the sale price, with the rest going to the housing provider.
The Office of the Deputy Prime Minister explained that there would be three strands to the new plans, which are set to be up and running by April 2006.
These will be:
Social HomeBuy - designed for social tenants to buy a share of the property that they already live in.
New Build HomeBuy - allowing people to buy a share of newly built property.
Open Market HomeBuy - this will let people to buy a property on the open market with the help of an equity loan.
The new Open Market and New Build HomeBuy schemes replace the government's current shared equity plans, Social HomeBuy is a new development.
"New Build and Open Market HomeBuy will offer people choice and flexibility when accessing affordable home ownership. By helping key workers, we will underpin the pursuit of excellence in our public services," said housing minister Baroness Andrews today.
"The schemes will also be available more widely to others wanting to own their own home, including first-time buyers prioritised for assistance in their region.
"Social HomeBuy will provide social tenants who do not have, or cannot afford the Right to Buy or the Right to Acquire, with an opportunity to buy a stake in their homes."
The plans in detail
Social HomeBuy
This will require a minimum initial purchase of at least 25 per cent of the value of a home. The remainder of the equity would be held by a housing provider. The provider will be able to levy a charge of up to three per cent on their equity. A lower target average for the charge will be set at 2.75 per cent. This would be an annual charge, paid in instalments by the buyer.
Buyers under the scheme will also receive a discount on the total purchase price of their home.
At least initially, there will be some flexibility in the precise terms of the scheme to ensure that providers can make it work both for themselves and for buyers, and to trial different products.
Social tenants buying under Social HomeBuy will also receive a discount of up to Right to Acquire levels, proportional to the share they buy.
Social HomeBuy will start off as voluntary; meaning landlords will be free to choose whether or not to offer this opportunity to their tenants.
Money generated by Social HomeBuy sales will generally be used to provide more social lettings. A small proportion may be spent on other housing related projects.
Open Market HomeBuy
Buyers will have to raise around 75 per cent of the value of a home on the open market to take advantage of this scheme. A housing provider will then provide a loan for the balance required. A small charge may be made on the equity share held by the provider - although less than the three per cent that could be charged under the Social HomeBuy scheme.
Open Market HomeBuy will be available to key public sector workers, social tenants, those on housing waiting lists and other first-time buyers identified as priorities by regional housing boards. The definition of a key worker will be extended from the one currently used.
Open Market HomeBuy will operate in the London, south-east and eastern regions.
The definition of a key worker will include all clinical NHS staff, teachers in schools and further education, police officers and community support officers, uniformed staff in fire and rescue services, prison and probation service staff, social workers, occupational therapists, educational psychologists, speech and language therapists, qualified nursery nurses, local authority employed clinical staff and local authority planners.
New Build HomeBuy
There will be a minimum initial purchase of at least 25 per cent of a newly-built home. A housing provider will hold the remainder of the equity.
As with Social HomeBuy, the provider will be able to levy a charge of up to three per cent on their equity. A lower target average for the charge will be set at 2.75 per cent. This would be an annual charge, paid in instalments by the buyer.
The scheme will be open to the same groups eligible for Open Market HomeBuy.