The Chancellor has confirmed that social housing tenants will be offered a 50% discount on their social housing property under the Right to Buy (RTB) scheme.
George Osborne pledged to reinvigorate RTB from the ‘slow and steady stranglehold’ on discounts that had restricted sales under the previous government. Receipts would be used to build a new affordable home for every home purchased.
Other announcements included a re-affirmation of funding for the £400 million ‘Get Britain Building’ programme to construct up to 16,000 new homes through a ‘shovel ready’ investment plan to help stalled projects.
A new Mortgage Indemnity scheme would encourage lenders to offer new home buyers 95% mortgages to help 100,000 people get onto the property ladder, whilst simultaneously protecting them against borrower losses, was also confirmed.
Specific details on the scheme are still being developed but according to the Council of Mortgage Lenders’ website, it could work in the following ways:
- Cash funds from developers of approx 3.5% of the property’s value will indemnify lenders for seven years-upon which interest is payable- with the amount returned at the end of the period minus any credit losses.
- Any lender and any new buyer can take part in the scheme.
- Flats and houses will be included but the scheme may not necessarily be available on every property, with lenders and developers having discretion over counter-parties they wish to work with.
- Scheme lending will be available to the owner-occupier sector only, not buy-to-let, and a maximum property cap will apply.
- Government will provide an additional 5.5% guarantee to the value of each property included in fund, to be called upon in event of losses.
Today’s announcement follows the publication of the Government’s long awaited housing strategy unveiled last week.
