16 May 2008
The Housing Corporation is to spend up to £200m purchasing homes on the open market as part of a major expansion of a government scheme for first-time buyers.
Some of the homes will be offered for sale through the Homebuy scheme with the remainder used by housing associations for social renting.
Announcing the extension of Open Market Homebuy to more households, housing minister Caroline Flint – following Gordon Brown's Queen's Speech preview on May 14 – said the corporation and social landlords would work closely together to ensure that properties were purchased from developers at competitive prices.
In future, all first-time buyers with a household income of £60,000 or less will be eligible for the scheme, which provides equity loans of up to half of the purchase price to back up regular mortgages. Previously it was targeted at key workers and other priority groups.
Flint admitted that the long-term solution to the affordability crisis was to build more homes but added: '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.'
Just 4,800 families had bought properties through Open Market Homebuy by March, when it was revamped as part of the Budget.
Sarah Webb, chief executive of the Chartered Institute of Housing, said it was vital that the £200m was used to buy family-size homes, not one-bedroom city centre flats that developers find hard to sell. 'While the announcement… is welcome, we need to ensure that good advice is available to minimise the risk to people wanting to take up the schemes,' she added.