At the recent Conservative conference in Manchester, Robert Jenrick announced plans to give housing association tenants the right to buy a share in the equity of their property. The housing secretary proposed that tenants of new housing association properties would automatically have the right to purchase a share starting from as little as 10%. A similar proposal was made by David Cameron in 2015 but was later scrapped. So what does this mean to you?
Right to buy with housing associations
Currently you can buy properties from housing associations under the shared ownership scheme. With shared ownership, the minimum amount you can buy is 25%. However, under the proposed right to buy shared ownership scheme, the amount you could buy would be lower, at 10%. Full details have not yet been disclosed in relation to who is eligible for right to buy, but housing association tenants who move into a new housing association home, would automatically qualify to take part.
What is right to buy and how does it work?
Currently, the right to buy scheme is in place for long term tenants of council owned properties. It allows tenants the opportunity to buy their home outright, often at a discounted rate. Some housing associations also offer right to buy.
Right to buy with bad credit or CCJs
Unless you had upfront cash to buy your share, you would need to secure a mortgage to take part in right to buy shared ownership. It can be harder for individuals with bad credit or County Court Judgements (CCJs) in their name to secure a mortgage or lending. There are lenders who will consider mortgages and loans to candidates with a poor credit history so don’t be put off applying. You must be aware however, that due to the financial risk, the interest rates charged can be higher than they would be normally.
What next for right to buy?
Robert’s announcement started a conversation and opened the debate for right to buy shared ownership. Right now, we will have to wait to hear what more from the Conservative party and how they plan to follow this up.