As of 5 January 2017, the government has announced that housing providers (housing associations, local authorities and private developers) in England can bid on £7bn in funds to increase the supply of affordable homes through the Shared Ownership and Affordable Housing Programme 2016-2021 (SOAHP 2016-2021).
Following the Chancellor's Autumn Statement on 23 November 2016, the government has highlighted it will continue to help first time buyers and extend home ownership. However, the £7bn in funds is a sum from previous announcements made: £4.7bn in grants announced in April 2016, £1.4bn announced in the November 2016 autumn statement, and £1bn under a previous aim for affordable homes.
The housing providers will bid to build thousands of shared ownership, rent-to-buy and affordable rented homes. £1.4bn will be available to housing associations and councils, and will be used to build 40,000 additional affordable homes by 2021. For homes in London, this budget will be dealt with by the Greater London Authority (GLA), as opposed to the SOAHP 2016 – 2021.
The government has stated £4.7bn of funds available between now and 2021 will go towards building at least 135,000 shares ownership homes, 10,000 rent-to-buy properties and 8,000 homes for supported living and the elderly to rent.
For rent-to-buy properties, the rent will be set at or below 80% of the local market rental value for a set time so that tenants can save for the deposit and then have the option to buy the house.
The communities secretary, Sajid Javid, said: “Our newly expanded affordable housing programme, turbo-charged by a multibillion-pound investment, will allow housing associations to build more homes in places where they are most needed, particularly for families who are just about managing''.
At a time when house building has been at its lowest since war time levels and people are struggling to get on the property ladder, an increase in funding is a positive step for affordable housing. However, it may still not be enough when 300,000 houses per year need to be built to tackle the shortage.
The prospectus from April 2016 highlights the importance of Shared Ownership in helping people buy their house, but it's also important to note the risks associated with the scheme. With shared ownership, you still don't own the house unless you buy 100% of the shares, so you are essentially a tenant. You are also liable to pay the full-service charges for the building's maintenance, which can be unpredictable and costly.
What's more, unless the housing association owns the block, they are not likely to be responsible for repairs to the building. Rather, they will have a lease for some flats, and tenants have a rental contract with them. The owner of the building is therefore not obligated to carry out repairs, so in the case of structural problems in ageing buildings, this can cause huge problems.
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