Council Tenants Offered £75,000 Discount On Right To Buy Housing Scheme

Council Tenants To Be Offered £75,000 Housing Discount

David Cameron has pledged to "reboot" the right-to-buy scheme by offering council tenants discounts of up to £75,000.

The larger-than-expected extension will encourage "strong families and stable communities", according to the Prime Minister.

Those who have five years' residency could receive a 35% discount, with an extra 1% for each added year up to a maximum of £75,000.

Tenants in flats will get 50% off after five years, with 2% added yearly.

Previously it was thought discounts would be limited to £50,000.

The money raised from sales will go towards building more social housing.

The government is also announcing more details of its NewBuy Guarantee, designed to give would-be buyers access to mortgages even if they only have a 5% deposit.

Names are being released of three high-street lenders and seven construction firms who have agreed to support the scheme.

Ministers say they believe the initiative will help 100,000 people who would otherwise have been frozen out of the property market and will support 50,000 construction jobs.

Developers would contribute 3.5% of the purchase price while the Government guarantees 5.5%. The scheme is available on flats and houses up to a maximum value of £500,000 in England only.

Mr Cameron said: "Strong families and stable communities are built from good homes. That's why I want us to build more homes and I want more people to have the chance to own their own home.

"We are acting today across the board to make this happen.

"We're rebooting the right-to-buy scheme to increase discounts for two million tenants in social housing in England. And we're delivering on our promise to offer affordable mortgages to buyers who might otherwise not be able to raise the money to buy a newly built home.

"It's no good hoping people will climb the property ladder if the bottom rung is missing. Affordable properties and available mortgages are vital. So we're working with leading housebuilders and lenders to get the scheme under way.

"It's a vital boost to the housing market, giving people good affordable new homes and backing thousands of jobs in construction in the process.

"This government doesn't just talk about expanding home ownership; we're making it happen."

Shadow housing minister Jack Dromey said: "Today's announcement is too little too late but at least it's something from a Government that has done virtually nothing to tackle the worst housing crisis in a generation.

"But there are questions to answer about this scheme. Why has the number of major lenders participating in the scheme fallen from seven to three and the number of builders from 25 to seven compared with when this scheme was originally announced?

"Reports have also suggested that few, if any, mortgage products will be available straight away and that the interest rates might not be attractive to would-be buyers.

"It would be absolutely wrong for the Government to raise the expectations of families and young couples only for them to find little choice and that they're unaffordable."

Speaking on BBC Breakfast about the NewBuy Guarantee, Housing Minister Grant Shapps said: "I think it is the best deal possible for home buyers - the average age of the first time buyer, in particular, has gone up dramatically, it is nearly 37.

"The problem is not that people cannot afford the mortgages, rates have been low for a long time.

"They can afford the monthly repayments, they can't get the deposit together because unlike in the past, you can't get 95% mortgages which operated fine for decades in this country.

"What we are doing today with this Government backed guarantee is making sure that people are once again able to put down just a 5% deposit."

One banking source said last week that some lenders will need more time to get to grips with the idea.

"It's not a scheme that's going to change the housing market," the source said.

"It's there to support housebuilders, not necessarily to support home buyers as a priority."

The source doubted that the scheme would help those with a poor credit history get on the property ladder as buyers would be subject to the same standard of checks as they are with mortgages generally.

The Financial Times reported last week that a dispute has emerged over the price banks are prepared to charge for a 95% loan-to-value mortgage. It suggested they are looking to charge 5% or more but housebuilders believe this may put people off the scheme.

The scheme is also viewed by some as complicated, operating through a Guernsey-based insurer owned by the Home Builders Federation.

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