The government has announced plans to spend nearly £7bn on building 400,000 new ‘affordable homes’.
In addition to boosting the upcoming Starter Homes Initiative and increasing investment in shared ownership homes, the Chancellor also announced a new London Help to Buy scheme, an increase in stamp duty rates for buy-to-let investors, and the launch of a pilot of Right to Buy for some housing association tenants.
The announcements in today’s Autumn Statement make up what the Treasury describes as ‘the biggest affordable house-building programme since the 1970s’.
London Help to Buy
From early next year, Help to Buy Equity Loans will be increased from 20% to 40% for first-time buyers in Greater London.
The new terms will apply to new-build homes in Greater London with a purchase price of up to £600,000. As with the current Help to Buy scheme, buyers will need a deposit of at least 5%.
Starter Homes Initiative
The government had previously committed to building 200,000 new homes to be sold at a discount to first-time buyers under the upcoming Starter Homes Initiative. Today’s announcement sees an extra £2.3bn earmarked for these homes, with direct funding being given to developers to get the process moving.
The Starter Homes Initiative will allow first-time buyers under the age of 40 to get a 20% discount on the new properties, which can have a maximum value of £250,000 outside of London and £450,000 in the capital.
It is not yet known whether the extra cash will have an effect on when the first starter homes will be available. Under the initial plans, developers were being encouraged to buy and prepare the first sites in 2016/17.
A further £4bn has today been set aside for housing associations, local councils and house builders to provide 135,000 Help to Buy shared ownership homes by 2021. This means that for the first time, shared ownership homes will be available in conjunction with Help to Buy.
These homes will be available to households earning less than £80,000 outside of London and £90,000 in the capital, allowing buyers with higher earnings to use the scheme (the usual earning limits for shared ownership are currently £60,000 outside of London and £71,000 in the city).
Shared ownership allows buyers to buy a stake of between 25% and 75% of a home and pay rent on the remainder, and is particularly popular with first-time buyers who are priced out of buying a home outright.
Stamp duty increases for buy-to-let properties
These changes are expected to bring in nearly £1bn, which Osborne claims will be reinvested into house-building.
Right to Buy pilot launching tonight
A pilot of the long-awaited Right to Buy extension for housing association tenants will begin at midnight tonight, with tenants of five housing associations given the immediate chance to buy their homes.
The housing associations are as follows:
- Saffron Housing
- Thames Valley
Specialist homes and reduced rent
Following lots of talk about a lack of suitable homes for older people, the government will spend £400m to help build 8,000 specialist homes for older people and those with disabilities.
Finally, a £200m fund will be introduced for 10,000 new ‘reduced-rent homes’ that tenants can live in for five years while they save for a deposit. Once the deposit has been saved, the tenant will have ‘first right’ to buy the home.
Finding the right mortgage can be a tricky business if you’re a first-time buyer. For tailored advice on the options available to you, you can call Which? Mortgage Advisers on 0808 252 7987
- Autumn Statement 2015 – Which? rounds up the key announcements
- Help to Buy Isa – learn about the latest way to save for a deposit
- How much deposit will I need for a mortgage? – prepare your finances ahead of an application
Your home may be repossessed if you do not keep up repayments on your mortgage.
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