The government has announced it will make new amendments to the shared ownership housing model, allowing buyers to increase their stakes by just 1% at a time.
In a new policy announcement, Housing Secretary Robert Jenrick revealed the plans which would allow people to increase their share of homes in smaller increments, rather than the current 10% step.
In addition to these new announced proposals, Jenrick also said that he would look to reform the planning system with the aims of increasing housing delivery.
Homeowners using the Help to Buy incentive could also be given new freedoms which would make it easier to take out a 35-year mortgage, with the government recently closing a loophole that had prevented people from taking out a mortgage with a term of more than 25 years.
On the announcements, Robert Jenrick said: ““Building the houses this country needs is a central priority of this government.
“We know that most people still want to own their own home, but for many the dream seems a remote one.
“My mission is to increase the number of homes that are being delivered and to get more young people and families on to the housing ladder, particularly those on lower incomes.”
He added that reforms need to go “much further” to make the housing market work.
“I will be looking at ensuring young people from Cornwall to Cumbria aren’t priced out of their home areas and how we can build public support for more house building and better planning.
“This government will help a new generation to own their home.”
Shelter, however, called the set of announcements from the new Secretary of State “worrying”.
Polly Neate, Shelter’s CEO, said: “Pinning his hopes on yet another complicated housing scheme is a worrying start for the new Housing Secretary of State.
“The government must realise that unworkable schemes, laden down with admin costs, are the wrong priority at any time – and are woefully inadequate when this country is facing the current housing emergency.
“If the new government is serious about getting to grips with our housing crisis then it must follow through on its commitment to get building. That’s why we’re calling for three million more social homes over the next 20 years, to give more families the sort of step up they actually need in life.”
It is expected that the new changes will come into early affect next year.
On the proposals, Kush Rawal, Director of Residential Investment at Metropolitan Thames Valley (MTVH) said: “We believe in making home ownership possible. We see great potential for this successful approach to be rolled out nationally by housing associations to make increasing equity quicker, cheaper and more hassle-free to shared owners.
“We stand ready to work with government to share our experience on this, and other measures that need to be taken to address the affordability crisis”.
Ishaan Malhi, CEO and founder of Trussle added: “With average house prices now nearly eight times the average UK wage, those on lower incomes often struggle to get any kind of a foothold on the housing ladder. So, it’s great to see Robert Jenrick’s proposal to introduce a new model for Shared Ownership.
“Ensuring homes are affordable will make homeownership more accessible, particularly for the under-served younger generation and those on lower incomes.
“However, 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.”
Further responding to the announcement, Stonewater gives ‘cautious welcome’ to the proposed shared ownership changes, with Sue Shirt, Stonewater’s Executive Director saying that the idea of reducing staircasing requirements is a ‘good one’, in principle, but any move to smaller increments will naturally incur additional costs for both customers and housing associations.
“We need to ensure that these additional costs are understood and minimised for both parties”, she added.
“It is important that alterations to the shared ownership model do truly enhance access for customers and ensure housing associations are able to continue building more
shared ownership homes.
“In our experience, there is huge demand for affordable housing of all tenures in communities across the country.
“While young people clearly form a large part of this demand, it is important to remember that the issue of affordability extends to a much wider range of people.”