Government to spend £8.6bn on 119,000 affordable homes

The money will deliver nearly 120,000 new properties across England, some of which will be available to buy and others will be for rent.

Key takeaways

The government has allocated £8.6bn to help thousands of people across the country get onto the property ladder.

The money will be used to deliver around 119,000 affordable homes, 57,000 of which will be for people to buy.

A further 29,600 of the properties will be delivered for social rent, while 6,250 will be affordable rural homes.

Housing Secretary Robert Jenrick said: “This huge funding package will make the ambition of owning a home a reality for families by making it realistic and affordable.

“We are also ensuring tens of thousands of new homes for rent are built in the years ahead.”

The funding is part of the Affordable Housing Programme, which aims to deliver up to 180,000 new affordable properties.Why is this happening?

The supply of new homes has been hit by the shutdown of the construction industry during the first lockdown, leading to an 11% fall in completions in the year to the end of March. The sector is also facing a shortage of workers as a result of Brexit.

Meanwhile, the pandemic has increased demand for property, particularly houses, as people reassess their housing needs.

The number of properties for sale has fallen to its lowest level for more than 6 years and is forecast to remain low well into next year, according to our latest House Price Index.

The net result is a significant mismatch between supply and demand, which is putting upward pressure on prices, making it harder for many people to purchase a home without assistance.What does it mean for you?

The announcement is good news for people struggling to get on to the housing ladder who want to take advantage of the affordable homes scheme.

The main scheme is shared ownership, under which you can buy a stake of as little as 10% in a property and pay rent on the portion you do not own, with the option to increase your share when you can afford to.

To qualify for a shared ownership home, you must have a household income of £80,000 a year or less, rising to £90,000 in London, and not be able to afford a deposit and mortgage payments for a property that meets your needs on the open market.

Nearly £5.2bn of the latest funding will be used to build properties outside of London, giving a boost to people in the regions who want to get on to the property ladder.What’s the background?

Affordable homes is just one of a number of government initiatives to help people purchase a property.

The flagship scheme is the Help to Buy equity loan, under which first-time buyers can purchase a new-build property with a 5% deposit, which the government tops up with a 20% equity loan that is interest-free for 5 years.

Other initiatives include First Homes, under which first-time buyers, key workers and local people, can purchase a home at a 30% discount to its market price, while the 95% mortgage guarantee scheme helps buyers get a mortgage with just a 5% deposit.

Those saving for a deposit can also take advantage of the Lifetime ISA, under which they can save £4,000 a year towards purchasing their first home or their retirement, which the Government tops up with a 25% bonus, up to a maximum of £1,000 annually.

The government recently launched the Own Your Home website offering information on all of its various schemes to help potential buyers decide which one is right for them.

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