£15,000 in the north of England and£20,000 in the south east could
be eligible to buy a share of their homes under new government shared
equity housing schemes - Social HomeBuy.
Further analysis added today to the current consultation Homebuy -
expanding the opportunity to own - shows that for every three
families buying a share of their home through Social HomeBuy, one
more family will also be able to move off the waiting list or out of
Deputy prime minister John Prescott said the figures showed a
government committed towards low income earners benefiting from its
new housing plans.
'Social HomeBuy will help tenants into partial home ownership and
with the money they pay being used to reinvest in new social housing.
This will make available sooner for families in temporary
accommodation and on council waiting lists new homes.
'We want families on lower incomes to get a foothold on housing
ladder but not at the risk of taking on financial responsibilities
they can't sustain. There will be strict checks to ensure this, with
the consultation proposing several measures to ensure anyone entering
into home ownership through one of the schemes is able to sustain the
long term costs.'
Mr Prescott added that many people would benefit, including key
workers, such as nurses and teachers, but that above all the research
showed Social HomeBuy can be affordable for tenants on relatively low
HomeBuy: Expanding the Opportunity to Own consultation was issued on
April 1 with a closing date of June 24.
1. Under the government's proposals, the following opportunities
would be available to those seeking assistance to buy a home:
* an ownership discount, through the modernised Right to Buy and
Right to Acquire schemes for eligible social tenants
* shared equity, through a new extended HomeBuy scheme to help key
workers, social tenants and other first time buyers, with three
variants depending on the type of home bought.
2. Subsuming existing low cost home ownership schemes under a single
HomeBuy banner will simplify the arrangements for people seeking
assistance to buy a home. It will also make those arrangements
fairer, by ensuring that all applicants benefit from a similar offer.
3. Under HomeBuy, buyers will purchase a share of a home - paying for
as much as they can afford through savings and/or a mortgage. The
remaining share of the home will be held by the local authority or
housing association. The local authority or housing association will
therefore share in any increase - or decrease - in the value of the
home. This is known as 'equity sharing' and enables people to buy a
home where they can't raise a mortgage to cover the full price.
4. Extra help will be offered to social tenants under Social HomeBuy,
to ensure it is affordable, by means of a discount on the buyer's
share of the home. This means that, if a social tenant buys 50 per
cent of their home, they would receive 50 per cent of the discount on
offer. The government proposes to test different levels of discount
to see which provides best value for money whilst ensuring
affordability for social tenants.
5. Social HomeBuy will initially be voluntary, but the Government
will encourage councils and housing associations to apply it as
widely as possible. The government proposes to enable landlords to
retain the sales proceeds to enable investment in replacement social
homes, which would be available to let earlier than homes sold under
the scheme would have become available.
6. Further key features of each of the three HomeBuy variants are set
out in the table below.
7. The government aims to announce decisions in the summer, after
considering consultation responses, and to introduce the new HomeBuy
arrangements by April 2006.
8. Gross Household Income (£k pa) Needed for Home Ownership based
on a regional government breakdown.
Region House Price (£k) Social HomeBuy
Option 1 Option 2
East 113 19 22
East Midlands 78 13 15
London 108 17 20
North East 64 10 12
North West 62 10 12
South East 125 20 24
South West 78 13 15
West Midlands 72 12 14
Yorkshire and Humber 59 9 11
9. These house prices are based on 2003/4 Right To Buy sales, uprated
to 2005 Q1 values. Average prices in London are lower than those in
the South East and the East, because London sales have a higher share
of flats, which tend to have lower prices than houses.
10. Gross Household Income (£pa) Needed for Home Ownership - Open
Market and New Build HomeBuy
Region New Build HomeBuy Open Market HomeBuy
Option 1 Option 2 Option 1 Option 2
East 24 28 27 31
East Midlands 18 21 20 23
London 32 38 37 42
North East 12 14 14 16
North West 13 15 15 17
South East 27 31 30 35
South West 24 28 28 31
West Midlands 18 21 21 23
Yorkshire and Humber 14 17 16 18
11. Open Market house prices are lower quartile values for the first
quarter of 2005, and range from£65,000 in the North East to£172,000
in London. The Table shows that households would need higher incomes
to afford the Open Market and New Build variants of HomeBuy than they
would need to afford Social HomeBuy. This is because there would be
no discount on the purchase price, and because newly-built properties
are assumed to cost 10 per cent more than comparable existing
properties. Incomes required for New Build HomeBuy would, however, be
lower than those required for Open Market HomeBuy because for New
Build HomeBuy households would need to fund a minimum of only 50 per
cent of the house price, rather than a minimum of 75 per cent as is
the case of New Build HomeBuy.