Spending Review key facts: Osborne unveils housing plan

George Osborne used his spending review to launch a housebuilding drive to deal with "a crisis of home ownership".

The Chancellor announced plans to build 400,000 new homes in England, claiming it will be the "biggest affordable house building programme since the 1970s".

The announcements included:

1. Help to Buy Shared Ownership: current restrictions on who can buy a home through shared ownership will be removed from April 2016
Shared ownership allows people to buy a share of a home – rather than the whole house – and then buy a greater share over time as they can afford to. They pay rent on the rest of the property.

Currently, these are allocated in several different ways including criteria set by local councils, for example whether potential buyers work in the local area or if they are already in council housing.

Help to Buy Shared Ownership will lift the limits so that anyone who has a household income of less than £80,000 outside London, and £90,000 inside London, can buy a home through shared ownership. Only military personnel will be given be priority over other groups. The scheme will apply across England.

People can buy a share between 25% and 75% of a home. The rent on the rest of the property won’t be more than 3% of the amount left.

For example, on a house worth £227,000 where the buyer has bought a 40% share, the rent won’t be more than 3% of the remaining 60% - in this case £4,000 a year, or £340 a month.

2. London Help to Buy: If you live in London the government will lend you 40% the price of your home from 2016
Help to Buy Equity Loans are already open to both first-time buyers and home movers on new build homes in England with a purchase price up to £600,000.

Currently, if you’re able to pay at least 5% the value of your home as a deposit, the government will lend you up to 20% of the rest of the value of the property, alongside your mortgage of up to 75%.

Equity Loan will be now available until 2021. And, to reflect the current property market in London, from early 2016 the government will increase the upper limit for the equity loan it gives new buyers within Greater London from 20% to 40%.

With London Help to Buy equity loan:
- you’ll need to contribute at least 5% of the property price as a deposit
- the government will give you a loan for up to 40% of the price
- you’ll need a mortgage of up to 55% to cover the rest
More information on how to use London Help to Buy will be available in early 2016 on the Help to Buy website.

3. First-time buyers will be able to get a 20% discount on 200,000 new Starter Homes
Starter Homes are new build homes available at 20% off the market price. They are only open to first-time buyers under 40. You can register to find out about Starter Homes in your area.

£2.3 billion will be spent on building 200,000 Starter Homes over the next five years.

This money will be given to house builders to provide a 20% discount on new homes. House builders can now apply to make their developments Starter Homes.

4. Money raised from tax on people buying their second home will be used to help those struggling to buy their first home
From 1 April 2016 people purchasing additional properties such as buy to let properties and second homes will pay an extra 3% in stamp duty.

5. Housing Association tenants will be able to buy their homes, with the first sales in 2016
Currently, most people who rent a council home have the right to buy their home from the local authority. There are discounts on the home price available in many cases, depending on how long people have lived there.

Right to Buy will now be extended to housing association tenants during 2016, giving 1.3 million households the chance to become home owners.

A small number of housing associations will be piloting the scheme in the next few months. More information is available on the Right to Buy website.

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