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Housing Help For Forces Families
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Housing Minister Yvette Cooper has announced that members of the Armed Forces will be given new support to help them buy an affordable home.
For the first time, service personnel and their families currently living in service housing in all regions will be eligible to apply for a shared equity loan to help them onto the housing ladder.
Under an extension of the Government's low cost homeownership programme, service personnel who qualify could boost their buying power by up to 32.5% with a regular mortgage topped up with a shared equity loan, provided by the Government and one of four private sector lenders.
Currently, a family on a combined income of ?40,000 could typically obtain a mortgage of just ?160,000 independently. If eligible for shared equity support, they could potentially buy a home valued at around ?210,000.
Housing Minister Yvette Cooper said: "This new support recognises the vital contribution our Armed Forces make to our communities. We want to help more key workers, like service personnel, and other first time buyers get a foot onto the housing ladder. That's why we have set out investment of ?10.2 billion to provide thousands more affordable and social homes."
Undersecretary of State for Defence, Derek Twigg, said: "I am delighted that the Government is making it easier for members of the Armed Forces to buy their first home. This is a further demonstration of the Government's ongoing commitment to our Service Personnel."
Military personnel are also currently able to buy a newly built home, paying a minimum 25% of the price and a reduced rent on the remaining cost of the home, through the low cost homeownership programme. The Government is also using the Housing and Regeneration Bill to ensure that service personnel are treated fairly when applying to councils for social housing or homelessness assistance.
Under existing housing legislation, members of the Armed Forces won't have a "local connection" with the district where they are serving or living. This can put them at a disadvantage, since if you don't have a local connection you may get less priority for social housing or, if you are accepted as homeless, you may be referred to another local authority where you do have a local connection.
Ministers are amending the law so that service personnel will have a local connection with the area which they are stationed or living in. This will put them on an equal footing with civilians.
Housing Minister Yvette Cooper added: "It is only right that we provide our servicemen and women with the best possible support as they move back to civilian life. The service our Armed Forces give to their country must not place them in any disadvantage when applying for council housing."
There are three products under Open Market HomeBuy, part of the Government's low cost homeownership programme, that allow the purchaser to buy a home on the open market with the help of an equity loan provided via the HomeBuy agent.
The first is a shared equity loan provided by the Government in partnership with two mortgage lenders (Bank of Scotland and Nationwide) that provides purchaser with an equity loan of up to 25 per cent of the value of the property they wish to purchase, alongside a conventional mortgage. Half of the equity loan is provided by their conventional mortgage provider and half by Government. The equity loan provided by the government is free from interest charge. The equity loan provided by one of the partnering lenders is free from interest charges for the first five years.
The second is a Government equity loan which offers purchasers a loan of 17.5% of the value of the property they wish to purchase, which they can use in conjunction with a mortgage from any lender.
The third offers a 15 per cent loan alongside the Government's 17.5 per cent loan to provide a total loan value of 32.5 per cent. This is offered by Yorkshire Building Society and is free from charges for the first five years.
MoD personnel qualify for the Government's HomeBuy mortgages (Open Market HomeBuy, New Build HomeBuy and Intermediate rent) where they have completed their basic training, have at least five years to serve before their discharge/retirement date, their permanent duty station is located within London, the English south east and east of England and are either Regular service personnel (i.e. regular service personnel, including Military Provost Guard Service, in the Royal Navy, Army and Royal Air Force (RAF)); Clinical staff (with the exception of doctors and dentists); MoD Police (MDP) Officers; and Uniformed staff in the Defence Fire Service.
The definition of local connection is provided in legislation - S199 of the Housing Act 1996. A person has a local connection with a local authority district if he has a connection because of normal residence of choice (previous or current); employment; family connections; or other special circumstances. Residence will not be of a person's choice, nor will they be considered to be employed there, if serving in the Armed Forces.
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