The Government is set to launch a new scheme allowing tenants to pay below-market rents for up to seven years, after which they will be given the opportunity to purchase the home.
The scheme, called Rent to Buy, will see the Government give housing associations and social landlords £400m in discounted loans to build up to 10,000 new properties between 2015 and 2018. These will mainly consist of one- and two-bedroom properties. Half of the £400m funding will be allocated to London.
Rental prices for the new homes will be capped at 80 per cent of local market value for a seven-year period.
The programme is part of a £23bn affordable homes programme for 2015 to 2018, as well as other schemes like Help to Buy and Right to Buy. Rent to Buy is being arranged now to allow construction work to start from 2015.
Communities secretary Eric Pickles says: “This Government is standing by people who work hard and do the right thing, and helping them move on and up in life.
“Both house building and the number of first-time buyers are now at their highest rate since 2007. But there is more to do. As part of our wider housing programme, this new scheme will help increase the provision of low-cost rented accommodation and provide a springboard for young people to upgrade to home ownership down the line.”
Mayor of London Boris Johnson says: “Through this pioneering scheme I’m challenging the capital’s developers to get building, and deliver the homes Londoners need, as fast as humanly possible. Loans are available to significantly accelerate the pace of development, especially on bigger schemes, and unlock additional supply.
“Through this exciting new fund we hope to provide thousands of brand new homes many years sooner than would otherwise be possible, and make them available to rent at below market rates for hardworking Londoners.”