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No mortgage and no deposit home ownership scheme proposed

Paloma Kubiak
Written By:
Paloma Kubiak

Ahead of the upcoming Autumn Statement next month, the National Housing Federation (NHF) has submitted a proposal to the government that would enable tenants to buy a home without a deposit or mortgage.

As part of a series of measures to try and deliver a step change in affordable housing the NHF, which represents housing associations, says it has identified 1.4 million people who are currently not served by current housing options.

To fill this gap it has proposed a ‘Buy as you go’ scheme in which, requiring no deposit, people would pay a monthly payment, which would be part rent and part acquisition of the property.

These contractual payments would be the broad equivalent to 90% of the market rate in their local authority area and, with equity building up from day one, should mean people using the scheme could own their home outright after 25 years.

“Many aspire to own their own home but are currently living in the private rented sector on salaries below the national average,” reads a statement from the NHF. “They struggle to borrow money via a mortgage due to insecure work. They are not able to access social or affordable housing or afford share ownership or starter homes, and 40% of them are families with children.

“With flexible funding, housing associations could deliver a new home ownership product at a scale for them that: would not require a deposit, would allow people to start building equity from day one and would involve lower monthly payments than market rent.”

While a number of housing associations have begun creating similar products, the NHF said it wants to develop a product that, with government support, can be scaled up into a national offer.

“We would welcome the opportunity to bring organisations leading this innovative work together with the government to discuss how these may be delivered,” said the NHF. “This would also provide an opportunity to discuss how the current Rent to Buy product could be improved to help more people into home ownership.”