Coronavirus has highlighted to us all the importance of having a safe home to call our own. I believe that everyone should have a decent place to live. I am committed to increasing the supply of affordable homes to rent and buy, providing more people with access to safe, secure and good quality housing.
Today I am announcing the details of the £12.2 billion investment in affordable homes and that Homes England will be publishing the prospectus for the new affordable homes programme this week. This new programme is the biggest single funding commitment to affordable housing in 10 years. The programme will unlock a further £38 billion in public and private investment in affordable housing.
A new £11.5 billion affordable homes programme will be delivered over five years from next year (2021-2026), providing up to 180,000 new homes across England, should economic conditions allow. This new programme includes £9.5 billion of new funding agreed at Budget and £2 billion previously announced for long-term strategic partnerships with housing associations. The money announced at Budget also included £700 million we will be spending on new affordable homes through the existing affordable homes programme 2016-22, which will continue to deliver new homes up to 2023.
I have also published the Government response to the “Making home ownership affordable” discussion paper that confirms the new model for shared ownership, which will be more consumer-friendly, fairer and easier to access.
The new affordable homes programme
Investing in future affordable housing is particularly important at this unprecedented time in order to support people across England, as well as the economy. Through this new programme I am giving housing associations and local authorities the means to continue to deliver affordable housing in the coming years, with the first homes to be delivered from next year.
The £11.5 billion programme will deliver up to 180,000 homes, should economic conditions allow. It will include a wide range of affordable homes of different tenures to support people in different circumstances and stages of their lives. It is my ambition that approximately 50% of the new homes will be available as affordable home ownership under the new model of shared ownership, helping even more people to realise their ambition of owning their own home. In addition, more housing association tenants will be able to become homeowners through the new right to shared ownership.
The remainder of the programme will deliver homes for discounted rent, including affordable and social rent. Social rent level are typically 50 to 60% of market prices and funding for these homes will be available to housing providers across England, to help those in the greatest need, and 10% of delivery through this programme will be used to increase the supply of much needed specialist or supported housing.
This Government are passionate about levelling up, and that includes increasing the supply of housing where it is desperately needed. This programme will deliver homes right across England. I have given £7.4 billion to Homes England to deliver affordable homes outside London. This is over £2 billion more than the amount given under the previous affordable homes programme, underlining the Government commitment to level up. I have also offered the Mayor of London £4 billion to help with acute housing challenge in London. Negotiations with the GLA about what they will deliver in return for the funding are still ongoing.
The new shared ownership model
Shared ownership has so far helped thousands of people buy their own home. Today I am announcing reforms that will be introduced as part of the new programme that will make it easier for more hard-working people and families to access and then progress to full ownership.
I listened to the views of the respondents to the “Making home ownership affordable” discussion paper published last year, and have built on the proposals outlined to set out a refined and expanded set of changes to the shared ownership model.
The new shared ownership model will reduce the minimum initial ownership stake from 25% to 10%, making it easier to save a deposit to get your foot on the ladder of home ownership. The new model will also make it easier and more manageable to increase your stake in the home, as shared owners will be able to staircase in smaller instalments of as little as 1%, down from 10%.
To further support new shared owners, I have also introduced a 10-year “repair-free” period during which the shared owner will not have to pay repairs or maintenance costs. This will help to bridge the gap between renting and home ownership. This change will prevent new shared owners being hit with repairs and maintenance bills and better support them to put money aside towards buying more of their home.
Finally, I will also improve the experience of shared owners wishing to sell their home. Through the new model shared owners will be able to take control of the resales process from the landlord at an earlier point, giving them greater influence over the sale.
These measures will apply to all new shared ownership homes delivered through the new affordable homes programme and we will also set an expectation that the standard model is used for shared ownership delivered through the planning system.
The right to shared ownership
In addition to the above reforms, today I have also confirmed that the vast majority of new rented homes delivered through the new affordable homes programme will provide tenants with the right to shared ownership. This will give tenants the opportunity to purchase a stake in their home if they wish to do so, and access all the benefits of the new shared ownership model.
My announcements today will support the Government commitment to increasing housing supply and support people from all backgrounds to realise their ambition to own a home.