15 December 2006
A government scheme that encourages tenants to buy shares in their homes must be made more flexible if the take-up is going to improve, says a new report.
Tenants should be able to purchase as little as 1% of their property as a first step towards home ownership, while housing subsidy rules should be amended to allow landlords to offer larger discounts and other incentives, it says.
The report, commissioned by London Councils, also proposes a capital-wide savings scheme under which landlords could encourage tenants to save by matching money they pay in rent once they reach a set target.
Just two councils, both in London, have so far offered to pilot Social Homebuy. The take-up among housing associations has also been disappointing.
A stake in the future, based on research by the London School of Economics, says many tenants cannot afford the existing minimum purchase of 25%, especially in the capital.
In his Pre-Budget Report, Chancellor Gordon Brown pledged to kick-start another shared equity scheme – Open Market Homebuy — by making it more attractive to people on lower incomes.
Purchasers might be able to buy as little as 50% of a new home with a conventional mortgage, instead of the present 75%, and take out equity loans to cover the remainder.
PFdec2006
