Home Group to help English tenants buy their homes

HG_P207Affordable housing provider Home Group has devised a way to help its customers overcome one of the biggest barriers to owning a place of their own – saving for a deposit while paying rent.

The organisation has committed to match, pound for pound, the UK government cash bonus to savers using a Help to Buy ISA to save for a mortgage deposit.

In what is believed to be a sector first, Home Group will also commit to a house price inflation freeze of up to five years as customers gather a deposit to buy their home. Customers who express an intention to buy their home could also benefit from reduced rent while they are saving.

Last year, the Department for Communities and Local Government (DCLG) announced its intention to give 1.3 million tenants of housing associations in England the chance to buy their home at Right to Buy levels of discount. A voluntary deal was agreed with the National Housing Federation to bring in the plan, which will see housing associations extend Right to Buy privileges to all their tenants and take the lead building properties to replace those that are sold off.

The Home Group scheme, named Graduated Ownership, is to be targeted at those who want to own their home but will not be eligible for the Voluntary Right to Buy (vRTB) scheme.

Mark Henderson, Home Group chief executive, said: “A compelling 87 per cent of our customers have told us that they would like to own their home and we believe the soon to be introduced vRTB scheme is the best way for them to achieve this.

“However a portion of our customers will not be eligible for vRTB either because they live in Scotland or they haven’t lived in their home long enough to qualify. This scheme will help those people.”

Just under a third of Home Group customers who want to own their home say that saving a deposit is the single biggest factor preventing them from achieving their dream. They cite limited income (which could be directed into savings), high deposit values and the ever moving finish line of property price inflation as the three biggest obstacles to saving a deposit.

To tackle that Home Group has identified three ways in which it can help customers:

  • Encourage customers towards the Help to Buy ISA under which government will add £1 towards deposit for every £4 saved. Home Group will match the government £1 meaning for every £4 saved customers will benefit with a £2 bonus.
  • Once customers start saving Home group will freeze the value of their property for five years. Any subsequent house price inflation rises won’t see a corresponding rise in deposit required.
  • Improve monthly cash flow – Home Group will reduce rents in return for the customer taking on increased repairs responsibilities - This will act as preparation for being a homeowner.
  • Mr Henderson added: “We’ve discussed this idea with the government who are very supportive although we still have some details to iron out. We expect to launch a limited pilot scheme later this year and we’re excited about the prospect of doing all we can to help our customers achieve their aspirations.”

    Funds raised from the sale of homes would be re-invested in providing new affordable homes.

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