According to recent news the Government is predicted to outline plans for a “Buy as you Go” scheme during this month’s Autumn Statement. These new measures are hoped to allow a generation of housing association renters to build up equity in their homes over time, eventually leading to owner occupancy.
There is an existing scheme that is similar to this Buy as you Go concept, as tenants currently living in eligible council and housing association properties are already entitled to purchase their properties at a discount. The Right to Buy Scheme offers a maximum discount on the value of a property by up to £103,900 in the UK, £77,900 outside of London. But, the new Buy as You Go scheme would offer rents at around 90% of market rate in the local area, splitting the payment between rent and an equity payment that would eventually lead to the tenant’s outright ownership.
The new scheme is hoped to eliminate the need for costly deposits and reducing rents to affordable levels that would eventually lead to an overall benefit of the tenant – and increase Government figures for homeownership in the process.
New figures from the Labour party shows that there has been a significant drop in homeownership since 2010 – with young people in the North of England thought to be the worst affected – showing that the problem is not just limited to London and the South East of the UK. In real figures, between 2010 and 2015, the number of homeowners in the North of England dropped by more than 130,000 – two thirds of the decline across the whole country.
Generation Rent has always been a hot topic of conversation among party leaders and how the problem of homeownership could be addressed. A report by Savills estate agents in London revealed that tenants in London face a 25% rise in rents over the next five years. The rest of the country faces a 19% increase, plus it appears that on a national average, private renters pay around 47% of their take home pay to landlords. Despite several measures that have been introduced to get first time buyers into the market, anything is yet to bear fruit. It appears that the Government’s focus is now upon long term prospects as opposed to short term strategies.
Our property lawyers and planning consultants at DMH Stallard will be watching the Autumn Statement closely on the day and we will make sure that we are on the pulse with any new measures that are introduced. If you would like some more general advice relating to real estate, contact us today.