HomeBuy Direct offers housing hope

As Christmas approaches, there could be the tiniest glimmer of hope for the housing market in the New Year according to Margaret Beckett, Minister for Housing. In an announcement yesterday, it was confirmed that the government was going to inject more than £400 million into a scheme aimed at helping first time buyers get onto the housing ladder.

The scheme is called HomeBuy Direct, and joins a number of other government initiatives already in operation under the HomeBuy banner. As with all HomeBuy schemes, this scheme is aimed at those whose household income is less than £60,000 per year, and who would otherwise be unable to purchase a property on the open market. Applications will be accepted via HomeBuy zone agents from early 2009, and it is hoped that the scheme will help up to 18,000 first time buyers.

The scheme consists of an equity loan of up to 30% of the value of the property to use as a deposit. There is no charge for the equity loan for the first five years, and because the mortgage will be for less than 75% of the property value, applicants will be able to benefit from some of the more attractive mortgage rates available on the market. The scheme is being funded by both the government and the 130 developers who have already agreed to offer the scheme. As the scheme is designed to apply to new homes, the government believes that it will help the building industry to sell the homes they have built, and thereby weather the current economic conditions.

The move has been widely welcomed, especially by developers who have flocked to the scheme which offers a welcome lifeline in the current climate. The enthusiasm has been so great that the announcement yesterday represented an increase of £100 million over the £300 million previously committed. With the Home Builders Federation having been involved in the design of the plan from the early stages, the scheme goes a long way to shake of the label of just another affordable housing initiative, and is likely to prove very popular with applicants.

Beckett said: "We are determined to give families real help in the current economic climate. For many young families who aspire to own a home, the difficulties in the housing market have made the step on to the property ladder that bit harder. This deal will give them more support and put their dream of becoming home owners within reach. At the same time, this scheme will also help developers to weather the tough times in the market, by protecting jobs and helping to keep business going."

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