22 March 2009

First-time buyers rush to sign up for HomeBuy Direct

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From
March 20, 2009

First-time buyers rush to sign up for HomeBuy Direct

Demand for the Government's new homebuying scheme has been three times the level expected

Demand from first-time buyers in London for a government homebuying scheme has been so high that developers think that they are in danger of running out of stock by summer. A new HomeBuy Direct scheme, launched in September last year, allows buyers earning less than £60,000 to take out a mortgage for 70 per cent of the cost of a property, with the Government and a developer jointly lending the remaining 30 per cent on an interest-free basis for five years, after which fees will apply.

The Housing Minister, Margaret Beckett, said that demand has been three times the amount the Government expected. Barratt, one of the developers included in the £400 million scheme, said that 20,000 potential buyers have registered their interest in buying one of its homes this way.

Such high levels of demand will put pressure on the Government to announce further funding to help first-time buyers in next month's Budget. The Government originally said that the scheme would help 18,000 first-time buyers across the country - just a fraction of the 357,800 that entered the market in 2007. About 1,300 will benefit in London, where average property prices are further beyond the reach of those on low incomes.

One Barratt development in Kennington, South London, allocated 26 flats to the scheme when it launched last week: 15 have already sold.

During a visit to the Kennington Park Square development, where one and two-bedroom flats are selling for between £234,995 to £265,000, a spokesman for Barratt told Mrs Beckett: “The scheme has been very successful. Stock numbers are running down very fast. By the end of June, we think they will all go.”

HomeBuy Direct was also intended to boost the housebuilding industry by helping to fill empty new-build homes that developers had failed to sell on the open market.

Mrs Beckett said there had been “good demand” across the UK, but “very subustantial demand” for homes in London. She acknowledged that there was some confusion surrounding shared ownership and shared equity homebuying schemes and said that the Government was aware of lenders' reluctance to offer mortgages to first-time buyers. She said: “We don't know yet what banks are thinking about the HomeBuy Direct scheme. We will be able to judge more effectively farther down the line.”

The Communities and Local Government office said that affordable housing schemes have helped 110,000 households to buy since 1997. Anyone interested in HomeBuy Direct should contact their local HomeBuy agent.

More details: direct.gov.uk homebuyagents.org.uk

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