RIGHT TO BUY MORTGAGES

October 19, 2015 by in category Mortgage News with 0 and 0
A bill which proposes to stimulate home ownership across the UK, is being read this week in Parliament.

Part of this includes the re invigoration of the Right to Buy scheme.

What might the impact be in the lending market?

Clearly capitalising on the perceived desire for home ownership, and an aspiration to help as many people as possible achieve it, The Conservative pledge to extend the Right to Buy to housing association tenants in England

  • One million, three hundred thousand families will be given the opportunity to purchase a home at Right to Buy level discounts, subject to the overall availability of funding for the scheme and the eligibility requirements. The presumption is that housing associations will sell the tenant the property in which they live.
  • The government will compensate the housing association for the discount offered to the tenant, and housing associations will retain the sales receipt to enable them to re-invest in the delivery of new homes.
  • Housing associations will use the sales proceeds to deliver new supply and will have the flexibility, but not the obligation, to replace rented homes with other tenures such as shared ownership.
  • Government will continue to work with the National Housing Federation and its members to develop new and innovative products, so that every tenant can buy a stake in their home.

 

So, it must be stated that this is potentially positive for those who aspire to home ownership, and can sustain it for the long term. But it must be balanced by a very clear understanding that we also need more rented housing, both affordable and at market rates – housing supply is the goal, not just home ownership supply. And, down at brass tacks business level for mortgage lenders, it is vital that any steps taken to promote home ownership are complementary to, and not at the expense of, the flow of lending to support sustainable housing finance in all tenures.

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