Changes are to be made to the shared ownership scheme, by which people will be able to buy their home in chunks of just 1%, rather than 10% as has been the case.
Housing secretary Robert Jenrick called the change “radical” and said it would make it simpler for tens of thousands to buy their own homes. There is to be a consultation on the proposal.
Jenrick also announced closing, with immediate effect, a loophole in Help to Buy which prevented people from taking out a mortgage with a term of over 25 years.
It means that buyers can spread their repayments over a longer period, for example 35 years.
In a third possible change, the Government is to look at ways of making home ownership more affordable for first-time buyers in areas where house prices are high.
This could include increasing the number of homes sold at a discount.
However, the proposed change to shared ownership has been queried by critics.
Tamara Hooper, RICS policy manager, said: “Changes to shared ownership may make a difference to some, but it is a complex legal process and the purchase of 1% may be more complicated and ultimately more expensive than if the 1% had not been brought.
“We look forward to the Government releasing more detail about how this announcement will work in reality.”
Ishaan Malhi, CEO of online mortgage broker Trussle, said: “The Government must ensure that this new initiative is financially beneficial for mortgage borrowers.
“It’s important to remember that there are extra costs involved with remortgaging to purchase additional shares of a shared ownership property, known as staircasing.
“Waiting to buy a larger share in the property, as opposed to buying in 1% chunks, could avoid paying more in fees than necessary.”
Mark Hayward, chief executive of NAEA Propertymark, said: “We support thinking creatively about ways to help first-time buyers on to the housing ladder and consumers will welcome the opportunity to increase their share of ownership more easily and to simplify the process by which they can sell their homes.
“However, the Government must be careful of the unintended consequences that any changes could have on the rest of the market as in many cases these are not properties that feed into the general market place but into a ‘cul de sac’ with no assistance to upward activity.”
I assume rather than people remortgaging for 1% at a time as the article suggests, people will look to see how much extra they can afford at the end of their 2 / 5 year fixed term and purchase 7% 8% 12% etc if they can rather than having to buy 10% 20%? Seems a good move to me.
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It will be all yours in 128 years time!
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