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Right to buy: How will Boris Johnson's scheme work?

·Finance Reporter, Yahoo Finance UK
·4-min read
Right to buy:  Prime Minister Boris Johnson (left) during a visit to the West Carclaze Garden Village housing development in St Austell, ahead of the G7 summit in Cornwall. Picture date: Wednesday June 9, 2021.
Right to buy: Boris Johnson has announced plans to let people to use their housing benefit to help get on the property ladder. Photo: PA

Plans to help lower-paid workers use housing benefit cash to buy a home have been revealed by UK prime minister Boris Johnson as he vows to turn renters into homeowners.

He said there are 2.5 million households whose homes belong to associations, saying “they’re trapped, they can’t buy, they don’t have the security of ownership, they can’t treat their home as their own or make the improvements that they want”.

He said that some associations have treated tenants with “scandalous indifference”.

“So, it’s time for change. Over the coming months we will work with the sector to bring forward a new right to buy scheme,” he said.

Johnson added that it would give “millions” more the chance to own their own home and would see “one-for-one replacement of each social housing property sold” while being affordable within existing spending plans.

Setting out his housing policy reforms, Boris Johnson said: “We will finish the right-to-own reforms Margaret Thatcher began in the 1980s.

“Ending the absurd position where first-time buyers spend their life savings on flats only to find themselves charged hundreds of pounds for painting their own doors or even unable to own a dog.”

The measures include “dealing with the scourge of unfair leasehold terms” which impact 4.6 million households.

“We will supercharge leaseholders’ ability to buy their own freehold,” he said, with discounts of up to 90% for those “trapped with egregious, escalating ground rents”.

Read more: Fewer house hunters as UK property prices set to rise even further

Earlier, Michael Gove suggested that benefit recipients in London and the south-east may still struggle to get on the property ladder.

“There will be many people in the north, Midlands and the south-west who will be well able to get on the property ladder using the amount they earn and receive in universal credit,” Gove told LBC.

The idea has raised questions on how claimants can save for a deposit as people only qualify for housing benefit if they have less than £16,000 in savings. The first

Setting out plans for working welfare claimants to turn “benefits to bricks”, Johnson said: “When (home) ownership remains beyond the reach of a great many hard-working people, it’s neither right nor fair to put ever vaster sums of taxpayers’ money straight into the pocket of landlords.”

Around £30bn a year was spent on housing support, a sum forecast to rise to £50bn by 2050 without action.

That money was being “swallowed” to pay the mortgages of private-sector landlords or by housing associations, he said.

“It’s time to put his huge wall of money — taxpayers’ money — to better use. It’s time to turn benefits to bricks,” he said.

“We are going to look to change the rules on welfare so that the 1.5 million working people who are in receipt of housing benefits — I stress working people — and who want to buy their first home will be given a new choice: to spend their benefit on rent, as now, or put it towards a first-ever mortgage.”

The speech takes place during a cost of living crisis, underlined by figures showing the average cost of a full tank for a 55-litre family car has hit £100.

Read more: UK house prices hit record £289,099 but market set to cool

The government will also explore discounting Lifetime ISA and Help to Buy ISA savings from universal credit eligibility rules.

Johnson said that will “make it easier for hard-working people to put away a little every month until they have enough for a deposit on their first home”.

The prime minister also said mortgage support for those who become unemployed will be available more quickly and the government was also looking at measures to “securitise” some of the £30bn housing benefits bill in order to fund more development of homes.

Johnson said the overall package would “not only help us to build many more homes in the right place but will help millions of people realise what is currently an unattainable dream of home ownership”.

The prime minister’s speech in Blackpool was billed as a reset for his premiership, setting out policies to tackle the housing crisis and cost of living, after surviving a bruising no-confidence vote in his leadership earlier in the week.

Watch: Will UK house prices ever fall?

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