The Government has announced new measures to help FTBs into affordable home ownership…

The measures are a key part of the Government's attempt to ensure a strong stable economy and to provide opportunities to all people to meet their aspirations.

From today, all first time buyers with a household income of £60,000 a year or less will have the opportunity to apply to buy a share of a home, under a major expansion of the Government's Homebuy programme.

Currently, the scheme is open only to key workers like nurses and teaches, social tenants, and some buyers identified as a priority regionally. But the new rules will mean that all first time buyers will have the option to apply for the HomeBuy programme, for the first time. This allows buyers to purchase a share from 25% of a property or to boost their purchasing power by up to 50% with a shared equity mortgage.

For example a household with an income of £32,000 could afford a house of £200,000, paying £760 each month - as opposed to £1,350 without the scheme.

Other measures being announced today to support first time buyers include:

• A new initiative to enable the Housing Corporation to allocate up to £200m of its resources to buy new properties on the open market, either to be made available for first time buyers to purchase through the HomeBuy scheme or for social rent. The Housing Corporation and housing associations will work together to ensure new properties are purchased from developers at competitive prices.
  
• Expanding the Open Market HomeBuy scheme so more households will be able to take advantage of a shared equity loan, to buy a new build property on the open market. Buyers will be able to identify the home they wish to purchase from a house builder and then apply for support from the homebuy scheme.

Housing Minister Caroline Flint said: "Most families aspire to get onto the housing ladder, but are being priced out of the market. We want to give them the support to help them buy an affordable home.

“The long term solution to the challenge of affordability is to build more homes. But in the meantime, we are doing more by giving more first time buyers the chance to boost their purchasing power and put their dream home within reach."

An interesting idea

Commenting on the proposals, Dan Jonhson, Managing Director of TheMoveChannel.com, said: "Throwing open the Homebuy program to non public sector workers is an interesting idea and one that seems to be aimed at voters outside the typical labour demographic.

"The entry criteria will allow anyone to apply if the household income is less than £60,000 – a figure that is roughly double the national average. Will there be a backlash from traditional labour supporters, unhappy that this scheme will help those already reasonably well off?

"Having already alienated large numbers of former supporters with his 10p income tax gaffe, Gordon Brown can ill afford another set of disgruntled voters".

A more logical approach

The CML’s director general Michael Coogan was positive about the proposed legislation: “The government’s announcement on shared equity means that its approach is now more logical, providing help based on the income rather than the occupation of buyers.

It will remove an anomaly by which providing help for one group of less well-paid workers makes access to home-ownership more difficult for others earning similar salaries but working in different jobs.

“The OFT market study in sale-and-leaseback is also welcome, and we hope it will be completed by September, as promised, and acted upon quickly. The reality is that sale-and-leaseback companies are already targeting home-owners in difficulty.

“The quicker we have effective regulation of the sector to provide protection for consumers, the better the safety net for borrowers in financial difficulty will be".