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First time buyers scheme helps just 215

By Channel 4 News

Updated on 16 July 2009

Almost a year after the government announced its plans to help first time buyers get a foot on the housing ladder, Channel 4 News can reveal that only 215 people have so far benefitted. Ben King reports.

For sale signs (Reuters)

Almost a year has passed since the government announced Homebuy Direct, a scheme to help first-time buyers who could not get onto the housing ladder by helping them to buy new build homes.
The scheme was announced on September 2, 2009 - but it took until March this year for it to open for business. But so far demand has fallen some way short of the early hopes. The government wanted to help 18,000 families - so far, it has helped just 215.
Homebuy Direct is a shared equity scheme. That means that buyers only have to find a mortgage for 70 per cent of the value of the home they're looking to buy. The other 15 per cent comes in the form of a loan secured against the property - half from the house-builder and half from government.
People who want to take part have to be first time buyers, they have to buy a new build house, and the household income must be less than £60,000 a year. The loans are interest free for five years, and can then be repaid - after that, they attract a 1.75 per cent annual fee on the house-builder's portion of the loan (which then rises 1 per cent than inflation).
Channel 4 News spoke to Joanne Steele, a 24-year-old graphic designer who is looking to by a flat in Croydon. She has done extensive research into the different schemes to help first time buyers. She looked into buying a Barratt property off the Purley Way through Homebuy Direct, but she turned it down because it was unaffordable.
The financial adviser she spoke to at Barratt told her the scheme came with a minimum size of mortgage - which made it too expensive for her and her husband. "They said, 'you've got to go for a bigger property to be eligible for it,' And it was actually putting an extra £40,000 onto my mortgage," she said. "Which was pretty scary, especially when the repayments were going to be more than a grand a month, let alone the service charge and everything else."
It is difficult to know exactly why take up has been slow - Joanne Steele says that it the new-build properties she saw were more expensive than other comparable homes. Lack of awareness of the scheme may also be a factor.
Proponents of the scheme, such as the Home Builders' Federation and the Housing and Communities Agency, which administers Homebuy Direct for the government, say that there are many more deals in the pipeline.
John Stuart of the Home Builders' Federation says that more than 2,000 sales are in the works: "We're heading in the right direction, the right trajectory as the government calls it, but I can't guarantee that we'll get to the full 18,000."
Of course, part of the purpose of the scheme was to support the country's big house-builders, which looked in serious danger of collapse last year, as demand for housing plunged, and many were forced to suspend new developments and lay off staff. And they have at least welcomed the scheme.
"We were well oversubscribed in their interest," says Sir Bob Kerslake, chief executive of the Homes and Communities Agency. "It's been able to give them a higher level of confidence about sales which in turn has enabled them to deal with unsold stock and in fact plan for new build."
There's no lack of first time buyers looking for a way onto the housing ladder. But Homebuy Direct has a long way to go to meet its early promises to help them.

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