DCLG publishes working paper on £400m affordable rent to buy scheme

Out-Law News | 28 May 2014 | 3:21 pm |

The Department for Communities and Local Government (DCLG) has published a working paper (7-page / 152 KB PDF) outlining proposals for an affordable housing rent to buy scheme.

Under the proposals, investors would receive a loan from the government to fund the building of new homes, which must be let for at least seven years at affordable rent. Following the seven year affordable rent period and the repayment of the government loans and interest, the investor would be free to decide whether to retain the properties as affordable housing or to offer them for sale or rent on the open market.

The DCLG said the scheme is designed to help those hoping to buy their own homes in the medium term but is flexible in terms of what support is offered to tenants after the initial seven year period. 

According to the working paper providers are expected to "ensure that a suitable plan for progression is in place at the end of the tenancy". This could include "arrangements to assist tenants in seeking new accommodation, offering tenants a first option to buy, or allowing a tenant to continue to rent the property, if appropriate".

The DCLG said that £400 million will be made available to pilot the scheme in 2015-17.

It said that it will publish a prospectus inviting bids in the summer, with bids to be submitted by October and funding decisions due in January 2015.