A £4 billion fund to build 135,000 shared ownership homes is to be launched, the Chancellor announced in the Autumn Statement 2015 spending review.
The Help to Buy shared ownership scheme means that the rules around shared ownership will be relaxed, so more people will be eligible to buy their homes in this way.
But what is shared ownership, and could it help you get onto the property ladder? Let’s take a look at how it works, as well as seeing what other housing news came out of the spending review.
The Chancellor’s message was that 400,000 affordable homes will be built by 2021 – and these will be affordable to buy, not just to rent. 200,000 of these will be starter homes, where first-time buyers will be given 20% off the asking price to help them get onto the housing ladder. Another 135,000 will be Help to Buy shared ownership homes, a plan designed to make it easier for struggling first-time buyers to afford property.
Shared ownership means that you buy a share of your home through a housing association and pay rent on the rest. You can usually own between 25% and 75% of your property and the rest is owned by the housing association. Under the new rules, the Help to Buy shared ownership homes will be available to households earning under £80,000 or £90,000 if you live in London.
However, some mortgage experts are warning that this cap has been set too high, meaning families earning a more modest income could end up missing out.
A London Help to Buy scheme was also launched in the Autumn Statement, aimed at helping families in the capital be able to afford to buy a home. It’s similar to the existing Help to Buy equity loan scheme where you can borrow up to 20% of the home’s value on an interest-free loan. The London Help to Buy scheme the government will lend you up to 40% of the property value interest-free for five years. You’ll have to pay back this loan after 25 years or when you decide to sell the property.
A new tier of stamp duty was announced in the spending review, meaning that those buying property as buy-to-let could pay more in fees. After the Chancellor cut stamp duty in his Autumn Statement last year, he said that he wanted to reform the tax to encourage first-time buyers. From April next year, anyone who buys property as a buy-to-let landlord or as a second property will have to pay 3% more in stamp duty.
This will apply for each of the existing bands of stamp duty so for properties worth between £125,000 and £250,000, first-time buyers will pay 2% in stamp duty while those buying the property to rent, or use as a second home, will pay 5%. The Chancellor said this was an attempt to discourage landlords from buying up affordable homes to rent them out, so that properties would be left free for families to live in them.
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