Let Down is delighted that Kirsty Williams was returned to the Assembly at the May elections, although it’s very disappointing that she was the only Liberal Democrat, given their suite of policies that would massively help renters in Wales.

We want to thank Peter Black, Eluned Parrot, Aled Roberts and William Powell for their contributions and willingness to listen to renters’ problems. Peter Black steered through all our policies into the Welsh Liberal Democrat manifesto and gave renters a much higher platform in Assembly debate. We’re grateful for everything they did for our cause.

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Welsh Labour’s First Minister, Carwyn Jones & the Welsh Liberal Democrat Education Secretary, Kirsty Williams

However, Kirsty has now joined the Welsh Labour Cabinet as Education Secretary. Whilst this supposedly isn’t quite a ‘coalition’, she has negotiated some housing policies as part of their Progressive Agreement. This is something that Plaid’s Compact to ‘Move Wales Forward’ unfortunately didn’t include. But we can only welcome that this minority Labour government seems to be issuing in a new era of collaborative politics in the Assembly, as Let Down believes more discussion and more need to agree with different parties can only be good for democracy.

Kirsty Williams’ agreement with Welsh Labour includes funding building an extra 20,000 affordable homes (the last Welsh Government only had a target of 10,000 over the 5-year term) and to introduce a ‘Rent to Own’ housing model. We’re particularly interested in how this progresses, probably with Kirsty’s input but delivered by the new Minister for Communities and Culture, Carl Sargeant. He used to have responsibility for Housing when taking forward the Housing (Wales) Act.

This is what the Lib Dems said about their Rent to Own model (with an impressive amount of detail!) when the policy was first announced last summer:

 

How this works

  • Rent to Own effectively allows first time buyers to take ownership of a home for the equivalent of market rent.
  • The homebuyer rents the property and accrues a share though their monthly rent until they have full ownership after 30 years.
  • This method negates the need for a huge deposit and will help working young people who can afford monthly payments – but are unable to save enough money for a down payment.
  • And as with a traditional mortgage, this is back-loaded so occupants earn a higher share the longer they have been in the home.
  • The occupants have the right to sell their property on the open market at any time, cashing out their share of the home – to use as a deposit for a home on the open market or to use as they wish.
  • This not a straightforward grant and build policy. It would be part of the mix in the financing of any new development and would be funded accordingly. Any new development by a Housing Association is funded by a mixture of grant and private finance. The income from rents is used to finance the loan. As each property attracts a market rent then costs would be recoverable by the Housing Association and would ensure that the sums on each development add up. This means that we do not need to identify additional capital finding to meet our target but instead just alter the make-up of new developments. However, we will be seeking to identify more capital funding for the Social Housing Grant in our 2016 manifesto so as to ensure that we do not reduce the number of affordable and social homes to rent as a result of this scheme.

Housing associations

  • This model will be viable for Housing Associations as even though over 30 years they transfer ownership of the property, the monthly revenue is equivalent to market rent: in other words, at least 20% higher than Affordable Rent, and approximately 40% higher than Social Rent.
  • We will partner with housing associations and other providers, to ensure monthly payments are no higher than market rent.
  • Homeowners will also be responsible for care and maintenance of their property, like other homeowners, reducing Housing Associations’ costs.

Numbers

We will aim to deliver at least 2,500 rent to own homes over an Assembly term as part of the existing Social Housing Grant.  At present, the SHG funds 50% or so of a new development and the rest is raised privately.  Rent to own would be part of the mix in the financing of any new development.

Eligibility

Applicants will have to be in steady employment with the same kind of affordability tests and credit checks as for a conventional mortgage. We will exclude anyone who owns their own home already.

Implementation and application

  • This would likely be a new initiative delivered in partnership with Housing Associations.
  • We would seek to introduce the first houses being built within two years of the election.