First-time buyer scheme announced
Friday, July 18, 2008
A scheme to make homes more affordable by allowing first-time buyers to rent a property as they save up to buy it has been announced today by the government.
Under the pilot scheme, households earning up to £60,000 will be able to rent a new home at a discounted rate for a period of two or three years while building up a deposit to buy a share in it.
Rents will be 80% or less of the real market value.
The scheme, which will be managed by the Housing Corporation, will be open to buyers who qualify for the government's new-build HomeBuy scheme, but are currently unable to buy.
When the buyer can afford to, he or she can buy a share of the property of at least 25% and continue to pay rent to a housing association on the remaining share.
Ultimately, the buyer can purchase a 100% share in the property, or move and take the equity built up in their share.
Earlier this year the government extended the HomeBuy scheme, opening it up to all first-time buyer households earning up to £60,000.
The government said the Rent to Homebuy scheme was designed to give more choice and flexibility to first-time buyers who have been hardest hit by the credit crunch.
Since the start of the year, all of the 100% mortgages available to new buyers have been withdrawn and many lenders have started to ask for a deposit of at least 10%.
Despite price falls, the average price of a property in the UK is still more than £180,000, according to Halifax, meaning a first-time buyer would need to raise a deposit of around £18,000.
Article continues at Guardian Online
Under the pilot scheme, households earning up to £60,000 will be able to rent a new home at a discounted rate for a period of two or three years while building up a deposit to buy a share in it.
Rents will be 80% or less of the real market value.
The scheme, which will be managed by the Housing Corporation, will be open to buyers who qualify for the government's new-build HomeBuy scheme, but are currently unable to buy.
When the buyer can afford to, he or she can buy a share of the property of at least 25% and continue to pay rent to a housing association on the remaining share.
Ultimately, the buyer can purchase a 100% share in the property, or move and take the equity built up in their share.
Earlier this year the government extended the HomeBuy scheme, opening it up to all first-time buyer households earning up to £60,000.
The government said the Rent to Homebuy scheme was designed to give more choice and flexibility to first-time buyers who have been hardest hit by the credit crunch.
Since the start of the year, all of the 100% mortgages available to new buyers have been withdrawn and many lenders have started to ask for a deposit of at least 10%.
Despite price falls, the average price of a property in the UK is still more than £180,000, according to Halifax, meaning a first-time buyer would need to raise a deposit of around £18,000.
Article continues at Guardian Online
Labels: first time buyers, Halifax, homebuy scheme, House market, property prices
