What is Right to Buy? Boris Johnson’s plans for housing association renters and universal credit - explained
Low-paid workers will be able to use housing benefits to secure and pay for mortgages under new plans announced today
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In speech today, the Prime Minister confirmed an extension of the Right to Buy scheme, along with a change to welfare rules to allow 1.5 million low-paid workers to use their housing benefits towards a mortgage.
It is hoped the pledges will help people on lower incomes onto the property ladder and will please rebel MPs and voters who are struggling amid the cost of living crisis.
The moves form part of a plan by Mr Johnson to reassert his authority after surviving a confidence vote on Monday, despite the revolt by 41% of his MPs.
What is the government’s new housing plan?
The Right to Buy scheme will be extended to housing association tenants under the plans, with the government pledging to build a new social home for every one sold.
Currently, tenants in council homes are eligible to buy their homes at a discounted price, up to 70% off the market value dependent on how long they have lived there. However, the scheme is less generous for those in homes owned by housing associations.
The government says that extending the scheme could benefit up to 2.5 million tenants who would gain the right to buy, freeing them up to become homeowners. It will also add value and allow people to make improvements to their home as they wish.
In a bid to encourage more people to switch from renting to buying, the government is also launching an independent review of access to mortgage finance for first-time buyers, with the aim of making it easier by widening access to low-cost, low-deposit finance such as 95% mortgages.
Soaring house prices, stringent mortgage lending restrictions and high deposit requirements are currently hampering the ambition of many young people who want to own their own home.
The government says that more than 50% of today’s renters could afford the monthly cost of a mortgage but various constraints mean only 6% could immediately access a typical first-time buyer mortgage.
Mr Johnson said: “We have a ludicrous situation whereby plenty of younger people could afford to make monthly mortgage payments – they’re earning enough to cover astronomical rent bills – but the ever-spiralling price of a house or flat has so inflated deposit requirements that saving even just 10 per cent is a wholly unrealistic proposition for them.
“First-time buyers are trying to hit a continually moving target. And of course the global rise in the cost of living is only making life harder for savers. So we want it to be easier to get a mortgage.
“Reporting back this Autumn, [the review] will look at how we can give our nation of aspiring homeowners better access to low-deposit mortgages.”
The Prime Minister also pledged to turn ‘benefits to bricks’ by changing welfare rules to give the 1.5 million people who are in work but also on housing benefit the choice to use their benefit towards a mortgage, rather than automatically going directly to private landlords and housing associations.
It means that if a family saves a deposit to buy a home, the government will back them with the same housing support that they would have used on their rent, to pay towards their mortgage instead.
Levelling Up Secretary Michael Gove MP said: “The government will change the rules to incentivise those who are claiming Universal Credit to save for a deposit.
“Currently, welfare rules taper the amount of Universal Credit received when the claimant’s savings exceed £6,000, and it stops entirely when savings exceed £16,000.
“We will commit to exempting Lifetime ISA savings from these rules – meaning hard-working people can save a little each month specifically for a deposit without impacting their Universal Credit payments, until they have enough for a deposit for a first home.”
What is the Right to Buy scheme and who is eligible?
The current Right to Buy scheme in England allows council tenants to buy their homes at a discount.
You can apply to buy your council home if:
- it is your only or main home
- it is self-contained
- you are a secure tenant
- you have had a public sector landlord for three years
If your home used to be owned by the council, but they sold it to another landlord (like a housing association) while you were living in it, you may also have the Right to Buy.
The government has an online eligibility checker on the Own Your Home website so tenants can check if they can apply.
Rules differ for those who live in Wales, Scotland and Northern Ireland.