26th September 2014
The government has launched its latest housing initiative to help young people on to the property ladder, offering ‘Rent to Buy’ as a way to save up a deposit.
Communities secretary Eric Pickles has launched a £400 million programme to increase the construction of new renal homes. Although the government launched Help to Buy last year, which offers aspiring homeowners and those hoping to move up the property ladder with a mortgage guarantee or interest-free loan, the Rent to Buy scheme goes a step further.
Under the scheme, housing associations and other housebuilders can bid for a share of the £400 million pot, which will be dished out as low-cost loans that will be paid back over 16 years, in an effort to build 10,000 new homes across the country by 2018, consisting mainly of one and two-bedroom flats.
As part of the deal, landlords must make the properties available at below-market rent for a minimum of seven years, a period that the government hopes will give tenants the opportunity to save up for a deposit to purchase their own home.
At the end of the period the tenant will have first refusal to buy the property or they can move our and buy a different property.
The scheme is part of a £23 billion affordable homes programme that is running alongside Help to Buy and Right to Buy, which allows council tenants to buy their own homes.
Pickles said: ‘This government is standing by people who work hard and do the right thing, and helping them move on and up in life. Both house building and the number of first-time buyers are now at their highest rate since 2007.
‘But there is more to do. As part of our wider housing programme, this new scheme will help increase the provision of low-cost rented accommodation and provide a springboard for young people to upgrade to homeownership down the line.’