£400 million deal agreed to provide affordable housing

Published	15 December 2008

A deal worth more than £400 million to help first time buyers aspiring to buy their own home was approved today by Housing Minister Margaret Beckett, as part of the Government's programme of action to tackle current difficulties in the economy.

More than 130 developers have agreed to offer the HomeBuy Direct scheme which will help up to 18,000 first time buyers to purchase a home at sites across England aided by an equity loan, part funded by the Government and the developer. The equity loan, which will be free of charge for five years, can be used as a deposit and can cover up to 30 per cent of the purchase price.

This means a first-time buyer could purchase a house worth £180,000 for as little as £126,000. As with other HomeBuy schemes, any first-time buyers whose household income is under £60,000 who cannot otherwise afford to buy will be able to apply.

The scheme will also support the house building industry by identifying buyers for their new homes, helping them to weather the current difficult conditions in the market.

Eligible first time buyers will be able to apply for the scheme from early 2009 by contacting a HomeBuy agent in their region.

Housing Minister Margaret Beckett said:

"We are determined to give families real help in the current economic climate. For many young families who aspire to own a home, the difficulties in the housing market have made the step on to the property ladder that bit harder. This deal will give them more support and put their dream of becoming home owners within reach. At the same time, this scheme will also help developers to weather the tough times in the market, by protecting jobs and helping to keep business going."

Sir Bob Kerslake Chief Executive of the Homes and Communities Agency said:

"There has been a tremendous response from developers to this scheme and we believe there is demand from purchasers who want to get on the property ladder. Our flexibility means that we have been able to add in additional funding from the National Affordable Housing Progamme to meet demand and respond quickly to the market."

HomeBuy Direct is one of a range of schemes designed to help families to get a foot on the housing ladder. We have already helped more than 110,000 people buy their own homes through shared equity and shared ownership since 1997. The Government is investing £8 billion over 3 years (2008-11) for the provision of new affordable housing for both social rent and low cost home ownership.

Notes to editors

1. The Government initially announced in September that £300 million would be available for the HomeBuy Direct scheme. The Government is announcing today that it will make an additional £100m available for the scheme in order to help up to 18,000 first time buyers, 8,000 more than first planned. The Government will invest this further funding for the scheme if there is the demand from first time buyers.

2. The list of sites can be found at: www.homesandcommunities.co.uk/ (external link).

3. Developers were invited to submit bids to the Housing Corporation (now the Homes and Communities Agency) to provide HomeBuy Direct on selected properties and sites. Bids were assessed according to published criteria, and had regard to regional housing strategies.

4. The Homes and Communities Agency has approved more than 18,000 properties for inclusion in the scheme - worth more than £400 million General eligibility for the scheme is the same as for our other HomeBuy products.

5. HomeBuy Direct was first announced in September 2008 and it is expected the first HomeBuy Direct homes will be available early in 2009.

6. As with the other HomeBuy products, the 23 regional HomeBuy Agents will be the first point of contact for First Time Buyers who are interested in applying for the scheme. Applicants will be subject to an affordability check, designed to assess the size of equity share that they are able to afford and sustain. If applicants qualify for the scheme, they will be invited to choose one of the HomeBuy Direct properties brought forward by the developers.

7. HomeBuy Agents (HBAs) are appointed housing associations who are providing a 'one-stop-shop' and point of contact for affordable housing options in a given area in England. They also handle the entire application process for the Open Market and New Build HomeBuy products. A list of the HBAs and their contact details are available at:
www.communities.gov.uk/housing/buyingselling/ownershipschemes/homebuy/contactyourlocal/.

8. A monthly charge on the equity loan will be levied from year six onwards.