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The new right-to-buy and 'benefits to bricks' schemes: what you need to know

Updated 13 June 2022

4min read

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Senior Content Writer

If you’re struggling to get a foot on the property ladder, you’re certainly not alone.

With house price increases continuing to outpace earnings, buying a first home is becoming tougher with every passing year, especially for those on low incomes. But a raft of government proposals, unveiled last week, aim to bring homeownership in reach for millions more of you. 

The new right-to-buy and 'benefits to bricks' schemes: what you need to know

On Thursday 9 June, Boris Johnson launched several eye-catching housing-market reforms as part of a new ‘mortgage review’, to help remove some of the barriers you may face to becoming a homeowner. 

While the finer details are due to be revealed this autumn, here we cover what we know about the measures so far, explain if you may be eligible for them, and assess the broader market outlook for budding first-time buyers. 

So, what do the reforms look like and who can benefit from them? 

In short, the reforms seek to offer financial support to those who need it most. 

Chief among the proposals is extending the current right to buy scheme - which we’ll cover in more detail into shortly - to housing association tenants, enabling 2.5 million homes to be bought by those currently living in them. The government is pledging to build a new social home for every one sold to ensure housing supply remains strong. 

In a further measure, the prime minister announced plans to shake up the welfare rules to make it easier to get a mortgage approved. Dubbed 'benefits for bricks', this will mean 1.5 million people in low-paid work but claiming housing benefit can have their welfare payments counted as income when applying for a mortgage. The upshot here is that more of you will be able to meet mortgage affordability criteria. 

There is also positive news for those currently in receipt of Universal Credit. As things stand, the amount of credit you can claim starts to reduce once savings exceed £6,000, and stops completely if they top £16,000. However, in a bid to incentivise people to save, the government plans to exempt Lifetime ISA savings from these rules – meaning you can save for a home without impacting your Universal Credit eligibility. For more how the Lifetime ISA can support your homeownership goals, keep on reading. 

What is right to buy and who is eligible? 

Kick-started by then-prime minister Margaret Thatcher in 1980, the right to buy scheme offers council tenants the opportunity to buy the home they reside in at a discounted rate. Between 1980 and 2020, just under 2 million homeowners benefitted from the scheme. 

To be eligible for right to buy, certain criteria must be met.

These are as follows: 

  • it’s your only or main home 

  • it’s self-contained 

  • you’re a secure tenant 

  • you’ve had a public sector landlord for three years. These do not have to be in a row. 

Clearly, the number of people who qualify for right to buy is limited, but for those who do the discounts on offer are attractive.

The level of discount is dependent on whether you live in a house or a flat, with rates for the latter more generous.

If you’ve been a public sector tenant for between three and five years, the discount is 50% for flats compared to 35% for houses. The discount increases 2% a year thereafter with a cap of 70% of your home’s market value, up to a maximum of £87,000, or £116,200 for homes in London.

The scheme also applies to those of you living in ex-council homes - this is called preserved right to buy. 

Please note, these only apply to homes in England. Different rules apply to those of you living in Northern Ireland, Scotland and Wales. 

Outlook for first-time buyers

We appreciate that even those of you not needing to claim state or housing benefits may still be struggling to buy your first home. 

According to data compiled by Halifax, the bank, the average UK house price has soared to just shy of £290,000, rising 10.5% in the past 12 months alone.

This means that to build up a sufficient initial deposit, aspiring homeowners are having save harder and for longer, underscored by the fact that at present only 31% of millennials own a property. 

While this may sound rather bleak, there are many reasons to be optimistic. By undertaking some prudent financial planning, much-treasured homeownership can be well within your reach.

Other government initiatives such as the above-mentioned Lifetime ISA allow you to save a tax-free lump sum that can be used to save for the deposit on your first home, and has the added boost of a government bonus of up to £1,000 a year.

For more information on how the Lifetime Isa can help make homeownership a reality for you, check out this recent article. Elsewhere, it may also be worth exploring ways of improving your credit score to fill lenders with the confidence that you can repay any borrowings. We’ve got a handy guide on how you can go about this, which you can find here

Where to turn for help? 

You should be aware that buying your council or housing association home, or any home for that matter, is not a decision to be taken lightly - we would strongly urge to seek the advice of a professional before making the leap.

At Unbiased, we have a mortgage calculator which tells you how much you might be able to borrow, and can connect you with an expert mortgage adviser who will recommend the most suitable course of action for your specific circumstances. This can provide you with the peace of mind that the repayments on your first mortgage are affordable both now and in future. 

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About the author
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Craig Rickman is senior content writer at unbiased.co.uk. He has been writing about personal finance and wealth management since 2016, including four years as a journalist at the Financial Times Group. Prior to becoming a professional writer, Craig spent eight years working as a regulated financial adviser. He holds the CII level 4 Diploma in Financial Planning.