Extension of the right to purchase to make home ownership possible for millions more people

  • Right to buy scheme extended to housing association tenants, with government pledging to build new social housing for every person sold
  • Universal Credit reform will encourage more hard-working people to save for a security deposit
  • Mortgage market review will aim to turn more ‘generation renting’ into ‘generation buying’

Two and a half million tenants who rent their homes from housing associations will have the right to buy them outright, the prime minister has announced.

In a speech today, he confirmed an extension of the popular Right to Buy scheme, which has made home ownership a reality for two million households since the 1980s.

Currently, social housing tenants are entitled to buy their homes at a reduced price, up to 70% off market value depending on the length of their residence. However, the scheme is less generous for people living in housing owned by housing associations.

Expanding the program could benefit 2.5 million tenants who would gain the right to buy, freeing them to own, add value and make improvements to their homes as they wish. The government will work closely with the housing association sector on the design of the scheme.

Social housing will always play an important role in our society, which is why the Prime Minister will also commit to building replacement social housing for every home sold.

The Prime Minister said:

Just as no generation should be excluded from homeownership because of when they were born, no one should be excluded from that same dream simply because of where they currently live.

For four decades it has been possible for social housing tenants to use a discount to buy the property they live in.

During this period, almost two million people have been helped to become homeowners.

They have changed identity and psychology, moving from depending on the state for every repair – from waterproofing to a new front door – to running their own family home, able to make improvements and to add value as they see fit.

In order to turn more members of ‘Generation Rent’ into ‘Generation Buy’, the government will also launch an independent review of access to mortgage finance for first-time buyers, with the aim of making it easier for this group by widening the low-cost, low-deposit financing such as 95% mortgages.

Currently, soaring property prices, tight mortgage restrictions and high deposit requirements are hampering the ambition of many young people to own their own home. More than 50% of renters today could afford the monthly cost of a mortgage, but various constraints mean that only 6% could immediately access a typical first-time buyer mortgage.

It will be the first comprehensive review of the mortgage market in a decade, looking for bold and innovative steps government and industry can take to help more first-time buyers.

As the Prime Minister put it:

We have a ridiculous situation where many young people could afford to make monthly mortgage payments – they earn enough to cover astronomical rent bills – but the ever-increasing price of a house or apartment has demands deposit rates so inflated that a savings of just 10 percent is an utterly unrealistic proposition for them.

First-time buyers are trying to reach an ever-changing target.

And of course, the global rise in the cost of living is only making life more difficult for savers.

So we want to make it easier to get a mortgage.

Report this fall [the review] will look at how we can give our nation of aspiring homeowners better access to low deposit mortgages.

The Prime Minister has also pledged to turn ‘benefits into bricks’ – changing welfare rules so that the 1.5 million people who work but also on housing benefit have the choice of using their allocation for a mortgage, rather than automatically going directly to private landlords and housing associations.

The welfare system exists as a safety net to help the poorest people, but the government also wants to incentivize people to find work and take action to improve their lives.

So if a hard-working family saves a down payment to buy a house, the government will support them with the same housing support they would have used for their rent, to pay their mortgage instead.

Upgrade Secretary Michael Gove MP said:

Today, we provide home ownership opportunities to millions of hard-working people across the country.

By extending the right to buy and providing the most comprehensive review of the mortgage market in decades, we’re supporting first-time homebuyers, removing barriers to homeownership, and addressing people’s priorities.

At the same time, we will continue to provide much-needed new quality social housing by replacing every property sold.

The government will also change the rules to encourage those applying for Universal Credit to save for a deposit. Currently, social protection rules decrease the amount of Universal Credit received when an applicant’s savings exceed £6,000, and it stops altogether when savings exceed £16,000.

We’re committed to exempting ISA savings for life from these rules – meaning hard-working people can save a little each month specifically for a deposit without affecting their Universal Credit payments, until they have enough. for a deposit for a first home.

Secretary of State for Work and Pensions, Thérèse Coffey, said:

For too many people, the aspiration to own their own home has been taken away. By transforming advantages into bricks, we open the door to home ownership for those on the lowest incomes.

By removing barriers and allowing people on benefits to save in a lifetime ISA, they will be encouraged to put aside a down payment to buy their home.

And we’re also giving people the choice to use their benefit for their mortgage rather than rent paying a buyer-rental landlord.

To support existing homeowners, the government will also improve Mortgage Interest Support (SMI) – a loan that helps applicants pay the interest on their mortgages and stay in their homes if they lose their job.

Currently this only comes into effect after nine months of unemployment, so the government will increase this to three months, to incentivize people back to work and bring the government in line with what lenders are offering in these circumstances.

The Upgrade Secretary will advance our commitment to deliver 1 million new homes by the end of this term. By working with local communities to build the right homes in the right places, more state-owned brownfields will be utilized and smaller sites unlocked, with priority given to key workers and first-time buyers.

The Prime Minister also today reaffirmed his commitment to ending the scourge of abusive tenancy terms to give tenants greater control over their homes and lives. The government will push forward tenancy reform, including the ability for a tenant to buy outright, helping 4.6 million households to truly own their own home. This will include rebates of up to 90% for those trapped by blatant and rising land rents.


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