Right to Buy Mortgages Shared Ownership

Housing Association Right to Buy

In September 2019 it was announced by the government that all housing association tenants would be given a “right to buy” their homes. This is the latest in a long line of housing policies designed to help those on lower incomes to make their way into home ownership.

Who is their accommodation for?

Everybody. There is not one particular group which social housing is generally targeted at although, the whole concept of social housing was developed in order to help make accommodation available and affordable for all. Recently those in the lower-income brackets or those deemed to be of a more vulnerable nature (such as the elderly or those with a disability) have been viewed as the most in need of social housing. However, with the increasing house prices over the last few decades, housing association properties, both for ownership and rental schemes increasingly offer an opportunity for younger people to find a home in a desirable area.

As the number of council rented properties reduces, housing association is often utilised to provide more affordable housing for rental purposes. Many tenants are referred to a housing association via their local authority, especially if the initial application for a council rental is not successful either through lack of supply or not meeting certain criteria.

What type of schemes do housing associations offer?

Typically, a Housing Association will assist by either offering a property at a discounted rent to the full market value, or by supporting a buyer to purchase a property on a shared ownership basis. Shared Ownership works by allowing an individual or individuals to purchase a percentage of the property. For example, if the full market value of a property was £200,000 and the share available to purchase was 50% then the purchaser would need to raise the funds to purchase for £100,000. This can be via a Shared Ownership mortgage with a deposit (with lenders often being able to accept as little as 5% of the value of the share being purchased) or via a cash purchase. Rent would then be paid to the Housing Association for the remaining share of the property which is not being purchased, often at a reduced rate to full market value.