Help To Rent Scheme To Support Young Workers
Liberal Democrat leader Nick Clegg has announced plans for a new ‘Help to Rent’ scheme should his party get elected to power in May. The scheme is intended to support young workers who want to move out of their parents homes and rent their first property in the private rental sector (PRS).
According to some of the latest research it is thought that around two million young working adults still live with their parents because they cannot afford to move into a property of their own, either purchased or rented.
The proposals for the Help To Rent scheme will include a government loan of up to £2,000 (GBP) in London, and £1500 (GBP) in other UK regions to cover the cost of tenancy deposits, with loan repayments staged over 12 or 24 months.
To be eligible for the proposed Help To Rent scheme and secure a loan for a deposit, tenants would need to be in paid employment, aged between 18 to 30 and not be property owners or seeking a tenancy in social housing provided by local authorities. Tenants could use the money for future rental properties once the loan is paid off and the repayment interest rate is expected to be set at the cost of Government borrowing, which is approximately 2.5%.
Rising rental costs in the UK’s private rental sector (PRS), has seen landlords asking for higher value deposits from tenants, meaning that the average tenancy deposit is now approximately £1,200 (GBP), usually six weeks rent.
The Liberal Democrats reckon that many young people are struggling to save for deposits without financial help from their families. Deputy Prime Minister and leader of the Liberal Democrats, Nick Clegg said: “Increasingly we see young people stuck in the family home as they can’t afford the upfront costs of a deposit to rent a property despite having a paid job. It means that couples whose children have grown up are not downsizing as readily as they might because they have to keep large properties to maintain space for their kids. So we have a very simple idea which is in effect to extend a system of government loans. The Help To Rent policy would not cost the government much in terms of year-in, year-out expenditure because it is a loan, and it counted as an asset not a liability, so the loan would not count against the national debt.
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