Affordable Housing

Affordable housing is a general  term to cover a variety of government sponsored schemes to help home buyers  enter the housing market. Schemes are  often run in conjunction with housing associations or developers and  administered by bodies such as the Homes and Communities Agency or through  agents known as HomeBuy Agents. The  schemes listed below must not be confused with the Help to Buy Scheme. This is a scheme that is was also introduced  by the government but this is a much broader based scheme intended to stimulate  the housing market.


There are restrictions on who can benefit from such schemes:

  • Most schemes are only available to first time buyers

  • Some schemes are open only to certain categories of worker, often known as "keyworkers"

  • Access to the schemes may be limited to those earning under a certain limit

  • Participants will still need to find the money for costs and fees associated with the purchase, together with the deposit on any share being purchased


The availability of the schemes and the terms on which they are offered, are subject to frequent change, so it is important to get up to date advice before deciding on any course of action.


Shared ownership schemes

These schemes allow a purchaser to buy only a proportion of the property (between 25% - 75%), paying only a low rent on the unowned share which is normally bought by a housing association. The Government scheme is called New Build HomeBuy and only applies to newly built homes. Participants in the schemes can gradually increase their share in the property: this is known as "staircasing". Additional shares in the property are bought at the market value at the time of the additional acquisition. Stamp Duty Land Tax is only payable once the share of ownership reaches 80%.


Shared equity schemes

With these schemes, the purchaser acquires 100% of the property through two different loans, one from a commercial mortgage lender, and the other an equity loan from the Government, a developer or another private equity loan provider. With an equity loan the lender shares in any rise (and perhaps fall) in the value of the property over the course of the loan. The equity loans are interest free for an initial period, but then interest may become payable. The Government schemes is called HomeBuy Direct. Stamp Duty Land Tax may be payable depending on the terms of the scheme.


Low-cost home ownership schemes

These schemes allow council and housing association tenants the chance to buy their rented homes at a discount: the "Right to Buy" helps a tenant buy a council home; and the "Right to Acquire" helps with the purchase of a housing association home. "Social HomeBuy" helps buy a share in a council or housing association home if a landlord participates in the scheme.


Rent-to-buy

These schemes, also known as  “save-a-deposit”, help someone save for a deposit whilst renting.  The last coalition Government amended  the  Rent to Buy scheme in September  2014.  The scheme is only available in  limited areas: for up to date information on the current extent of the scheme  look at https://www.gov.uk/affordable-home-ownership-schemes/overview


Where to go for further information

Details on Government schemes can be found at  https://www.gov.uk/government/organisations/homes-and-communities-agency


How we can help

Anyone considering purchasing a property on a shared ownership or shared equity basis needs legal advice in relation to the obligations which flow from this relationship. Our experienced property team will be able to provide advice and assistance in relation to the rights and responsibilities involved.

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