All first-time buyers offered share equity schemes

All first-time buyers earning less than £60,000 will be able to take advantage of the government's share equity scheme, the prime minister announced today.

Gordon Brown said in the draft Queen's Speech £100 million will be made available to shared equity schemes under the Homebuy programme.

He told parliament: "£100 million pounds for shared equity schemes to allow more first time buyers to purchase newly built homes on the open market; and for the first time an offer of shared equity housing open to applications from all first-time buyers, subject to a household income limit."

The scheme allows buyers to purchase a percentage of a property – renting the remaining part from a housing association. Currently it is only open to key workers.

Under the scheme, a household with an income of £32,000 could afford a house of £200,000, paying £760 each month - as opposed to £1,350 without the programme.

Furthermore £200 million will be made available to the Housing Corporation to buy new properties on the open market, either to be made available for first time buyers to purchase through the HomeBuy scheme or for social rent.

The Open Market HomeBuy scheme will also be expanded so more households will be able to take advantage of a shared equity loan, to buy a new build property on the open market.

Under the plans, buyers will be able to identify the home they wish to purchase from a developer and then apply for support from the homebuy scheme.

Housing minister Caroline Flint said: "Most families aspire to get onto the housing ladder, but are being priced out of the market. We want to give them the support to help them buy an affordable home.

"The long-term solution to the challenge of affordability is to build more homes. But 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."

Katie Tucker, at mortgage broker Charcol, said: "The extended eligibility criteria will allow more first time buyers to buy a part share in a property, because, at least for the MyChoiceHomeBuy, several lenders can offer 100 per cent of the share that is being bought so no deposit is needed.

"However, the administration with the Homebuy schemes has been notoriously slow and complicated, many applicants find that a mortgage plus rent option is more expensive than renting or buying, and of concern with the New Build HomeBuy is the risk of new builds losing value."

Daniel Barnes