Housing Minister John Healey offered councils a far reaching new deal giving them the freedom to fund and run their council homes, without central Government subsidy.
In announcing the deal, Mr Healey set out plans to dismantle the current (HRA subsidy) system of funding council housing in 177 local authority areas.
The deal will release at least 10% more money in every council for maintaining and managing their homes. It will also create the funding capacity to build over 10,000 new council homes a year.
Tenants whose homes have been upgraded through the Government's Decent Homes programme will have the guarantee that their homes will be funded and maintained to this standard for the future, backed by the Tenant Services Authority.
Under this new self-financing system councils will keep all the rent they collect from their homes and all the receipts from any sales of houses or land. Not a single penny will go to Whitehall and not a single penny will subsidise other councils as the current system dictates.
In return, councils will accept a share of an additional £3.65 billion debt. No council will take on a level of debt that is not sustainable for the long term.
It is argued this is also a good deal for central government by removing the complex annual round of cross-subsidy decisions, making the funding system clearer and fairer. It also devolves from Whitehall the funding, management and standards of council housing in future to elected local councils.
Local government has long criticised the HRA subsidy system and long called for reform. These proposals dismantle the current system and sets up a new devolved self-financing settlement.
In a bid to help struggling would-be home owners onto the property ladder, Thames Valley Housing (TVH) is launching its own 100% mortgage. The three-year fixed rate product is available on selected TVH shared ownership properties.
TVH Chief Executive Geeta Nanda said:
"Shared ownership is a vital intermediate market product, for which we are continuing to see increasing customer demand. Despite this, many of our prospective buyers have been unable to secure a conventional mortgage due to a lack of deposit.
"In our commitment to helping those in housing need, we felt compelled to launch our own mortgage product to ensure that we could assist those who are otherwise left out in the cold. Why should only those with parents able to help with deposits be able to buy?
"The product offers real flexibility to our customers. If they wish to make overpayments they can do so without penalty. We're even offering added piece of mind through a 3-year buy back guarantee, under which we promise to buy back their home if they chose to sell it and face negative equity."
The mortgage will enable successful applicants to buy a share of a TVH home without having to save for a deposit. Applicants will be subject to stringent affordability criteria, which will be assessed by an Independent Financial Advisor (IFA.)
Unlike conventional 100% mortgages, TVH's product covers as little as a 25% share of the value of the property, reducing the risks to the customer and the Association.
