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Welsh Government launches first affordable ownership programmes
Ministers in Wales will today launch Rent to Own and Shared Ownership programmes with £70m of new grant investment.
They will be the first government-backed homeownership initiatives to be run specifically by housing associations in Wales. Welsh Government already provides a Help to Buy scheme.
It is hoped at least 1,000 homes will be delivered through the new programmes by 2021.
Under the Rent to Own model, households will be given a two-year tenancy at market rate by participating housing associations.
Then, at the end of the tenancy, they will have the option to be refunded 25% of their rent payments to use for a deposit, plus 50% of any uplift in the value of the home.
The Welsh Government said this system will help potential buyers who are able to afford monthly payments but do not have access to a deposit.
It differs from the model generally used in England, where households are given a five-year tenancy at discounted rent to save up for a deposit on the home.
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An Inside Housing investigation in November found that of the Rent to Own homes built in the UK government’s National Affordable Housing Programme 2008/2011, just 11.3% were purchased at the end of the five years.
However, Longhurst Group reported that tenants who were refunded their first year’s rent were more likely to be able to afford to buy.
The Welsh Government said it will actively monitor the success of both programmes.
The Shared Ownership initiative will be the same as the English model, where buyers purchase between 25% and 75% of a home’s equity and pay rent on the remaining portion with the option to staircase up to full ownership.
“Help to Buy Wales has successfully supported many people in Wales who have a 5% deposit to buy their own home. However, we know there are many hard-working people who find it hard to save a deposit,” said Rebecca Evans, housing and regeneration minister for the Welsh Government.
“These schemes will help people to get on the property ladder today; instead of spending years saving for a deposit they will spend those years living in their home.”
The programmes are not only available to first-time buyers, but applicants will need to have a household income of £60,000 or less and will be subject to an affordability check.
Rent to Own buyers will be able to purchase their homes outright or through Shared Ownership.
Hayley Macnamara, policy and programmes manager at Community Housing Cymru, said: “We welcome the Welsh Government’s significant grant investment to help housing associations develop Rent to Own and Shared Ownership properties.
“By assisting people who are struggling to save for a deposit, it helps those on low budgets leave the private rental market and buy their own homes.
“Crucially, it also generates an income stream that can be reinvested into the social housing sector.”
The initiatives will be administered via a newly launched website, Your Home in Wales.
Inside Housing reported that the Welsh Government was considering a shared ownership programme as part of its boosted affordable housing commitment in 2016.
Matt Kennedy, policy and public affairs manager at the Chartered Institute of Housing Cymru, said: “These products will clearly help those who struggle to save additional money whilst also meeting the cost of living and paying rent.
“With our supply of social housing under so much pressure, this is a step forward in increasing the effectiveness of those homes whilst also maximising the opportunities to increase homeownership in Wales.”
Update: at 13.04pm, 01/03/18 A comment from CIH Cymru was added to the story.
