The government will review a new national model for shared ownership to make it easier for people to buy more of their own home, including allowing them to buy in 1% increments.
Housing Secretary Robert Jenrick (pictured) said that this is among a raft of measures to help people on lower incomes get onto the housing ladder.
Jenrick said: “Building the houses this country needs is a central priority of this government. We know that most people still want to own their own home, but for many the dream seems a remote one.
“My mission is to increase the number of homes that are being delivered and to get more young people and families onto the housing ladder, particularly those on lower incomes.
“That’s why I am announcing radical changes to shared ownership so we can make it simpler and easier for tens of thousands trying to buy their own home.
“Help to buy, the cut to stamp duty and our home-building programmes are already making a real difference, but I am clear we need to go much further if we are to make the housing market work.
“I will be looking at ensuring young people from Cornwall to Cumbria aren’t priced out of their home areas and how we can build public support for more house building and better planning.
“This government will help a new generation to own their home.”
At present, borrowers have to buy an increased share in 10% chunks which can be as much as £45,000 per time.
This process of increasing the stake until the property is bought outright is known as ‘staircasing’.
People use shared ownership to buy a proportion of their home which can be as little as 25% then pay a subsidised rent on the rest.
The Housing Secretary also said he will look to reform the planning system to increase housing delivery and make home ownership more affordable for people looking to buy their first property, particularly in areas which are least affordable.
This could include increasing the number of homes sold at discounted prices to people trying to get onto the property ladder, boosting homeownership and helping build local support for new development.
Homeowners buying a property under help to buy will be given new freedoms which will make it easier to take out a 35-year mortgage.
The government has also closed a loophole with immediate effect that prevented people from taking out a mortgage with a term of more than 25 years.
Ross Hunter from Post Office Money added: “It’s important that we take steps to enable people from a variety of economic backgrounds to find routes on to the housing ladder.
“In 2018, a first-time buyer household income in the UK was £48,289 on average, and the average cost of a property in the UK was £282,713 – it can take years to save for a deposit and 69% of first-time buyers will depend on additional help from their loved ones to save the necessary funds.
“Any step to support people on lower incomes in their journey to realise their aspiration of owning a home is welcome.”
Marc von Grundherr, director of Benham and Reeves, said: “The latest changes to shared ownership are a novel idea from Robert Jenrick but as we’ve seen before through the likes of Help to Buy, an idea that will further fuel demand rather than address any real supply imbalance.
“While helping those in shared ownership will provide a leg up to some, the 200,000 homeowners in this position account for less than one percent of UK properties.
“Reducing the barrier to homeownership via shared ownership properties doesn’t supply more homes and it will be interesting to see if any concrete strategy on doing so comes from this latest government rhetoric.”