Housing Minister Yvette Cooper launched a new shared equity mortgage to help an extra 20,000 people buy their own home.
The Government has teamed up with four private sector lenders - Nationwide, Yorkshire Building Society, Advantage (a Morgan Stanley company), and Bank of Scotland - to offer a mortgage that will boost the buying power of those qualifying, by up to 25%. Currently, a family on a combined income of £35,000 could typically obtain a mortgage of up to £122,500. If eligible for Open Market HomeBuy, they could potentially buy a home worth over £160,000.
No deposit is required and monthly repayments will start at around 20 per cent less than buying without assistance, because lenders and the Government would expect to benefit from any increase in the value of their equity share in the property.
The scheme is available to key public sector workers, social tenants or those on a council waiting list and other priority first-time buyers. Applicants will need to contact a HomeBuy agent - a one stop shop providing affordable housing options across the UK.
In order to qualify, an applicant would need to be able to fund 75% of their purchase with a mortgage offered by one of the four lenders. This will be topped up with two equity loans each worth 12.5% of the purchase price from the Government and the lender.
The scheme allows the buyer to choose any property on the open market within their price range. There are no charges on the lender's equity loan for the first 5 years, and no charge will ever be placed on the Government's equity loan. In return both the lender and the Government will be entitled to a share of any increase in the value of the property when the home is sold and the equity loan repaid.
In addition to the new HomeBuy mortgage being launched now, qualifying households have the option to buy a shared ownership home through New Build HomeBuy, or buy their social rented home through Social HomeBuy.
The Government is investing £970 million in the Housing Corporation's Affordable Housing programme for 35,000 low cost home-ownership properties. English Partnerships is also offering equity loans on homes on public sector land.
In addition, the Shared Equity Task Force will report by the end of the year on ways to further increase the number of households able to benefit from shared equity schemes.
Local authorities in England are to receive £3.47 billion to improve the quality and management of their council homes. The management and maintenance allowances in 2007-2008 represent an increase per dwelling from 2006-2007 of 3.96% in cash terms - or an additional subsidy of £131.5 million.
In addition, the Rental Constraint Allowance has been more than doubled, from £48 million in 2006-2007 to an estimated £100 million.
This settlement is the second of a two-year programme, which gives authorities greater certainty in setting their budgets and priorities.
Housing Revenue Account (HRA) subsidy is distributed according to the Government's assessment of each English housing authority's relative spending needs on council housing. Subsidy is payable where this calculation shows a deficit between income and expenditure. Guideline rents are used to assess an authority's relative rent income, and allowance is made for expenditure on management and maintenance (M&M), the Major Repairs Allowance (MRA), and debt charges.
Management allowances and maintenance allowances are used to distribute the total resources available within the subsidy calculation for M&M expenditure. They take account of the characteristics of the housing owned by individual authorities together with other factors that influence costs.
Local authorities will set their actual rents in January/February 2007, taking account of the subsidy they will get. The assumptions in the subsidy calculation are that rents will change by 7.2% cash.
The assumption is that the average national guideline rent will now be £60.16 a week (up from £56.11 a rise of £4.05), and in London £74.49 (up from £69.47, a rise of £5.02).
Around £640 million in England in 2007-2008 will be allocated as subsidy to support for those authorities in deficit on their landlord functions.
Note: Figures in brackets represent increased loan facilities with the lender, including new lending.
Barclays were appointed by AmicusHorizon Group to lead a syndicate to provide a £650 million refinancing package.
Bradford and Bingley new lending during October included:
Britannia Building Society new lending included:
HBOS agreed additional lending with Popular HARCA to support stock transfer from Tower Hamlets Council (£110m).
Lloyds TSB agreed a finding package of £105 million with Derwentside Homes, to support the transfer of 7,000 dwellings from Derwentside Council - scheduled for December 2006.
Nationwide agreed several lending packages, including:
Principality Building Society announced new lending that included:
Royal Bank of Scotland agreed new funding to Dominion Housing Group of £100 million. Dominion also secured new funding of £20 million from Bank of Scotland. The Association also negotiated refinancing packages with Bank of Scotland and Abbey worth £125 million. The funding will support a three-year development programme.