Scheme for first-time buyers announced

16 July 2008

Scheme will help first-time buyers onto property ladder

The government has today announced a new scheme which will help to make first homes more affordable for first-time buyers by allowing them to rent the property while saving up to buy it.

The pilot scheme will enable households earning up to £60,000 to rent a new property at a discounted rate for a time period of two or three years while they save up a deposit to be used later to buy a share in it.

The rent will be 80% or less of the ‘real market value’.

The scheme will be managed by the Housing Corporation. Buyers who are eligible for the government’s new-build HomeBuy scheme, but cannot currently buy, qualify for the new scheme.

Once the buyer has saved up enough money, they can buy a share of the property of a minimum of 25%. The buyer would then continue to pay rent to a housing association on the remaining share.

Eventually, the buyer will be allowed to purchase the remaining share in the property until they own 100% of it, or they can choose to move and take the equity they have already invested as their share of the property’s value.

The government said the aim of the Rent to HomeBuy scheme was to give more choice and flexibility to first-time buyers who have suffered the most from the hard-hitting effects of the credit crunch.

Caroline Flint, the housing minister, said: “We are determined to do everything possible to promote long-term stability and fairness in the housing market.

“The international credit crunch has created significant challenges not just for the UK housing market, but in other parts of Europe and the United States.

“However, the long-term need to provide more homes has not gone away. We have a growing and ageing population and will only see worsening affordability until we increase housing supply.