LETTINGS NEWS: Rent to Buy scheme receives mixed response
A scheme which plans to make a £400 million pot of money available as low-cost loans to housing associations and social housing providers, has received a mixed response.
Under the scheme, announced by Eric Pickles on the eve of the Conservative party conference, loan applicants must agree to build new homes for rent at below market rates (mainly one and two bedroom apartments). Such homes must be built between 2015 and 2018 and be available for a for a minimum of seven years, giving tenants the opportunity to save up for a deposit and get ready to buy their own home if they wish. The idea is that at the end of the period, the tenant will have first refusal to buy the property. If the property is sold, the housing association will have the option to use any returns on their investment to build further affordable homes in the area. If the property is not sold, they will have to rent at an affordable rate to another tenant who needs assistance in buying.
“This scheme will help increase the provision of low-cost rented accommodation and provide a springboard for young people to upgrade to home ownership” claimed Pickles.
However, Matt Hutchinson, director of SpareRoom.co.uk, criticised the scheme because “even 10,000 homes won’t scratch the surface of a chronic supply problem that is severely impacting renters.” In addition, of the £400 million of government loan funding for this scheme, half will be available only to developments in London.