Government provides homeownership boost

Ramesh Sharma

June 1, 2004

Following the pre-Budget report this week from the Chancellor, HBOS, plus Nationwide and Yorkshire building societies have all confirmed they will be providing a HomeBuy scheme in an effort to bring an additional 20,000 households into homeownership by 2010.

The HomeBuy scheme helps buyers to purchase a home on the open market with a loan provided by the government. Lenders will also commit to this practice by adding a ‘top-up’ equity loan to the buyer’s mortgage.

The offer is set to become available from October 2006 on a two-year trial after further consultation with the Council of Mortgage Lenders and the FSA has taken place.

Steve Sandiford, head of specialist lending strategy at HBOS, said: “This scheme will be welcome news for first-time buyers who need help getting onto the housing ladder.”

However, Jeff Knight, head of marketing services at GMAC-RFC, expressed his concern that so few lenders had taken the opportunity to promote the scheme. He said: “I would like to see more lenders given the opportunity to get involved, although not all will, in order to increase consumer choice and therefore ultimately the long-term sustainability of the initiative.”

Ray Boulger, senior technical manager at John Charcol, said: “The questions that need answering are what exactly will the criteria be to decide who has access to this scheme and why is the government being so parsimonious with the funding?

“Helping only 20,000 first-time buyers by 2010 will hardly make a dent in the problem. It is obviously disappointing the government will fail to meet its target date of April 2006 for the start of this scheme by six months. This is probably in part due to its failure to understand early enough in the process that its creation, the FSA, needed to be involved.”

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