The government has unveiled a number of reforms to help people on lower incomes get onto the housing ladder, which includes letting homeowners in shared ownership increase their share at lower increments.
Housing secretary Robert Jenrick today (August 28) announced that the government will review shared ownership rules to make it easier for people to increase their share by allowing them to buy in 1 per cent increments instead of the previous 10 per cent.
Shared ownership schemes allow individuals to buy a proportion of their house, which can be as little as 25 per cent, and pay subsidised rent on the remainder while buying further stakes in a process called “staircasing”.
The government also pledged new measures to make it easier for Help to Buy borrowers to take out a 35-year mortgage.
This means homeowners can reduce their monthly mortgage repayments by spreading their borrowing over a longer period.
Mr Jenrick said: "I am announcing radical changes to shared ownership so we can make it simpler and easier for tens of thousands trying to buy their own home."
Chris Sykes, mortgage consultant at Private Finance, welcomed the changes to shared ownership, claiming they will help those who cannot afford to pay large sums to increase their share.
Mr Sykes said: “This is a good scheme which will allow more people to get onto the housing ladder without having to purchase at full value initially.
“The change suggested will be very beneficial to shared homeowners and will help them own more of their property without paying out massive sums.”
He added: “One example could be an individual getting a Christmas bonus. This could be an excellent opportunity to purchase more of the property and in turn reduce rent paid on the remainder of the property, so will save money in the long run.”
But Kevin Dunn, director at Furnley House, warned that legal costs and other charges may still be payable on each increment made.
Mr Dunn said: “The changes are not very inventive, but probably the most that could be hoped for from a government in chaos.
“I can’t see it making much difference and I’m not sure they’ve considered the additional administrative charges (from Help to Buy agencies, solicitors etc.) from purchasing in a number of increments rather than one or two.
“I would say it is more of a propaganda piece to look like first time buyers are being helped, when in actual fact, I would imagine it would help little, if any, first time buyers.”
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