Federation Welcomes Two New Govt Schemes
|The Federation has welcomed two Government schemes announced today to help people buy their own homes.
The NewBuy Guarantee will put together the Government, high street lenders and building firms to allow prospective homeowners to get a 95% mortgage to buy a new-build property.
House builders involved in the scheme will pay 3.5% of the sale price into a fund, while the Government will guarantee another 5.5% - bringing the fund to 9% of the sale price.
If a buyer defaults on payments and the value of the property does not cover the mortgage, the lenders will be able to access the fund. The Government will only step in if the house builder's contribution is insufficient.
The reinvigorated Right to Buy scheme will give social housing tenants a discount of up to £75,000 to help them buy their own homes. Properties that are sold will be replaced by new homes set at near-market rents.
However, setting a flat national cap for the level of discount does not take into account different house prices across England. This could affect lower-value areas where the money generated from social housing sales may not be enough to replace those homes.
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The Government also recognised that, as independent organisations, housing associations retain control of how to use their receipts.
Federation Chief Executive David Orr said: "We're delighted the Government is recognising that housing can play a major role in delivering economic growth.
"NewBuy will increase house builders' confidence, boost levels of new housing supply – which will create new jobs - and help people currently faced with high deposits save enough money to buy their own home.
"The redesigned Right to Buy scheme should help people realise their aspirations of home ownership.
"With 4.5 million people on waiting lists, it is crucial the scheme replaces the homes sold, one-for-one, as soon as possible. Otherwise we’ll never get to grips with England’s housing crisis.
"The Government needs to provide a system of caps that reflects local variations in house prices, and introduce a fixed time period within which Right to Buy receipts must be reinvested in new homes."
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