Recent surveys have found that levels of home ownership in England are the lowest they have been since 1986, with over 6 million households in rented accommodation, which equates to 86%, unable to fund the 5% deposit needed to purchase a home. The National Housing Federation (NHF) have also found that 1.4 million people are outside the scope of national planning policy in that they do not qualify for social housing, are unable to sufficiently save for a deposit, even when looking at affordable home ownership options such as shared ownership and starter homes.

To address this issue the NHF have proposed a ‘buy as you go’ model to the government where tenants are offered a long-term tenancy with monthly contractual payments that equate to 90% of market value. This would cover the rental cost as well as allowing the occupant to acquire small chunks of equity in the property, gradually moving towards full ownership without the need for a deposit or mortgage.

The ‘buy as you go’ model has been based on other home ownership schemes developed by housing associations. Home Group have a product called Graduated Ownership which is targeted at people who would like to own their own home but will not be eligible for the Voluntary Right to Buy scheme when it is introduced.

The Graduated Ownership scheme has 3 strands to assist Home Group tenants onto the property ladder:

1. For every £4 the tenant places into a government run help to buy ISA £1 will be added by the government and a further £1 from Home Group to assist in saving for a deposit.

1. The value of the property will freeze for 5 years once the tenant commences saving for a deposit.

1. Home Group will reduce the monthly rent in exchange for the tenant taking on some of the repair responsibilities in order to improve the tenant’s cash flow.

The Home Group Graduated Ownership scheme has received government support and a pilot is expected to commence soon.

Other Housing Associations including Tamar Housing, Two Castles and Sunderland Housing Association already have similar schemes to assist their tenants in buying their home.

The charity Shelter have raised concerns regarding the buy as you go scheme relating to the affordability of the rent as households who are ‘just about managing’ would not be able to afford rent set at 90% of market rent. To address this Shelter are calling for rents to be set based on income as opposed to market rent values. Shelter have also asked for clarity on what would happen where the tenant wants to move or can no longer afford the payments, what would happen to the equity they have in the property?

Discussions between civil servants and government ministers are ongoing although there is an intention to provide state funding for deposit and mortgage free home ownership schemes. We will know more following the autumn statement on 23^rd November and of course DASH will keep you posted.

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