First time buyers who find themselves priced out of buying a property on the open market are being offered a leg up on to the housing ladder by the latest of five Government-led HomeBuy schemes. But who's eligible?
By Gordon Miller
More than 130 developers have signed up to offer the latest initiative called HomeBuy Direct, which will help up to 18,000 first time buyers to purchase a home at sites across England aided by an equity loan, part-funded by the Government and the developer.
Housing Minister Margaret Beckett said, '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.'
HomeBuy Direct is one of a range of schemes designed to help families to get a foot on the housing ladder. Since 1997 more than 110,000 people have bought their own homes through shared equity and shared ownership. The Government is investing £8 billion over three years (2008 to 2011) for the provision of new affordable housing for both social rent and low cost home ownership.
The equity loan, which will be free of charge for five years, can be used as a deposit and can cover up to 30% of the purchase price. A monthly charge on the equity loan will be levied from year six onwards.
This means a first time buyer could purchase a house worth £180,000 for as little as £126,000. Any first time buyers whose household income is under £60,000 and who cannot otherwise afford to buy will be able to apply – not only key workers, as was the case with previous schemes.
It's not only first time buyers and key workers who stand a chance of benefiting. People who have previously owned properties but are now unable to do so - for example, in cases where relationships have broken down - can also apply.
Buyers can redeem the loan in installments, purchasing up to 100% of the equity after their initial purchase by buying additional equity at the market rate. Alternatively, if they sell their home, the equity loan is repaid by way of a share of the sale proceeds.
The list of sites where properties are for sale under HomeBuy Direct. Eligible first time buyers are able to apply for the HomeBuy scheme from early 2009 by contacting a HomeBuy agent in their region.
As with the other HomeBuy products, the 23 regional HomeBuy Agents will be the first point of contact for first time buyers who are interested in applying for the scheme. Applicants will be subject to an affordability check, designed to assess the size of equity share that they are able to afford and sustain. If applicants qualify for the scheme, they will be invited to choose one of the HomeBuy Direct properties brought forward by the developers.
HomeBuy Agents (HBAs), who will assist enquirers, are appointed housing associations who are providing a 'one-stop-shop' and point of contact for affordable housing options in a given area in England. They also handle the entire application process for all HomeBuy products.
Whitehotproperty.co.uk is a website that exclusively offers chain-free properties being sold by home builders and mortgage lenders which have been priced to sell. One in four also has a buyer incentive - paid for by the sellers to encourage buyers to buy, making them ideal for first time buyers.
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