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Housing package help unveiled

02/09/2008

First-time buyers will be offered 'free' loans as part of the government's package to kickstart the property market.

The programme, called HomeBuy Direct, will offer first-time buyers with a household income below £60,000 loans worth up to 30 per cent of a new home which are interest-free for five years.

The government expects this will help 10,000 buyers on to the property ladder.

In addition, for the estimated 9,000 families on the brink of repossession, the government is launching a mortgage rescue scheme.

Social landlords such as housing associations would pay off the debt and the homeowner would then rent the house back at an "affordable" level.

Extra cash will also be available for cheap housing schemes, which could see 5,500 new homes being built over the next 18 months.

"This government is committed to practical action to help those most affected by the current state of the housing market," explained communities secretary Hazel Blears.

"We are working to make sure everyone struggling to pay the mortgage gets support and advice."

Speculation has been rife in recent weeks the government was to make an announcement, following the release of leaked documents to the Sun newspaper last month.

However, the government has been criticised for delaying such an announcement, as potential buyers delay purchases with potential savings on offer.

Ms Blears also confirmed some £400 million will be spent to boost the spending power of social housing providers, including registered social landlords and councils, in order to deliver 5,500 more social houses over the next 18 months by bringing funding forward.

Housing minister Caroline Flint added: "We are determined to continue to do everything possible to promote long- term stability and fairness in the housing market.

"The measures announced today will go significantly further in supporting families who may be facing difficulties at the moment, while ensuring we maintain our focus on delivering more affordable homes over the long term."

Russell Jervis, managing director of estate agent network haart, commented on the announcements: "The government's housing market rescue package is certainly long overdue and decisive action is now imperative.

"With property prices falling by 15 per cent in many areas already this year, we have seen a renewed interest in first time buyers looking to purchase a property.

"However, this important group of buyers is being stopped in its tracks by a lack of available finance and the crippling stamp duty tax, which has prevented the enquiries translating into sales."