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17/03/2015

Lib Dems launch Rent to Own scheme

Words: Laura Edgar

Young people will be able to own their own home without needing a deposit under new plans promised by the Liberal Democrats.

By allowing first-time buyers to build up a share in their home through renting, the Rent to Own scheme aims to enable young people onto the property ladder.

The Liberal Democrats said: “This is a revolutionary shift in housing policy that will give young people caught in ‘Generation Rent’ a chance at home ownership.”

The party’s policy builds on work by Gentoo Group, a housing project in which buyers do not require a deposit or mortgage to buy their own home. At the end of the agreement, customers own 100 per cent of their home outright.

Rent to Own will allow first-time buyers to steadily build up a share in their home through monthly payments that are the same as market rent, say the Liberal Democrats. After 30 years, customers will own the property outright.

The Lib Dems added that they would partner with housing associations and other providers to deliver the scheme, which is part of their election manifesto pledge to deliver 300,000 homes a year.

Deputy Prime Minister and leader of the Liberal Democrats Nick Clegg, said: “For working young people the dream of home ownership is increasingly out of reach.

“Prices are so high renters cannot afford to save for a deposit, which means they can never take that first step onto the housing ladder.

“Young people deserve better. Rent to Own will mean, regardless of their background and family circumstance, they will be able to make this a dream a reality.

“This is about building a stronger economy and fairer society, and making sure generation rent has the same opportunity to get on in life as their parents and grandparents before them.”

Gentoo Group said the adoption of their housing model is recognition of the group’s “strength as an innovative solution for some would-be homeowners caught up in the UK’s housing crisis.”

Chief executive Peter Walls said: "A now-proven concept, [Gentoo] Genie has already unlocked home ownership for many that were excluded.

“We look forward to working with any future government to deliver this as we see Genie as one of many solutions needed to address our dysfunctional housing market.

“Genie has received support across all the three main political parties and we are currently working to drive our expansion forward.”

The National Housing Federation said the scheme was a welcome step, however, “we want the next government to publish a long-term plan within a year of taking office setting out how they will do this.”

Gill Payne, assistant director policy and external affairs, explained: “Housing associations already help thousands of people meet their housing aspirations, including 250,000 households through Shared Ownership alone, and offer a range of low-cost and flexible routes to owning a home. These types of schemes, often called home purchase plans, which allow people to build a stake in their home over time, help overcome the key barrier to home ownership of needing to raise a deposit. There are already successful examples of this approach such as the Genie product by Gentoo housing association.

“Political support and public investment will be crucial if these types of schemes are to really take off and deliver the number of homes the Liberal Democrats have suggested.”

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