Page last updated at 14:00 GMT, Tuesday, 8 April 2008 15:00 UK

Extra help for first-time buyers

Prospective home buyer
Some home buyers are being frozen out of the market

The government has announced new measures to encourage first-time buyers and key workers to participate in its affordable housing schemes.

There will be 1,500 grants to help qualifying buyers with costs such as solicitors' charges and furniture.

The government said more than 3m has been allocated for the grants - enough for 2,000 people.

The grants are to run in conjunction with a part-buy scheme offered to key workers and certain first-time buyers.

Helping hand

The grants will be offered to buyers who take part in the government's Open Market Homebuy scheme (OMHB).

Under the OMHB, qualifying buyers take out a mortgage for a percentage of their home and then another loan - known as a shared equity loan - from the government and lenders to pay for the balance.

We are making the dream of a new home more affordable for thousands of low-income first time buyers
Prime Minister Gordon Brown

Those who qualify include social tenants, key workers and some first-time buyers.

There are currently two OMHB shared equity loan products offered by the government, offering loans of between 15% and 50% of the total cost of the property.

To promote the scheme, Prime Minister Gordon Brown visited one homeowner in Archway, north London, who had received a 27,250 deposit to buy a one-bedroom ex-council flat.

Zoe Broadhead, 27, who contributed 13,000 herself plus 170,000 from a mortgage company, said: "I would not have been able to get on the ladder without the scheme."

Mr Brown said: "I want key workers, nurses like Zoe and teachers, for example, to be able to get a foot on the property ladder. Shared equity housing schemes make that possible."

Commenting on the initiative, Shadow Housing Minister Grant Shapps said: "This is just a smokescreen to cover up Labour's botched housing policy".

"The incredible thing is that stamp duty for first-time buyers is already nearly 1,700, so the money pledged won't even cover that cost".

The Conservatives also criticised the government for bringing in Home Improvement Packs (HIPs) - a cost they say will be borne by buyers.

Instead, Mr Shapps said the Tories wanted to increase the stamp duty threshold for first-time buyers to 250,000, claiming this would enable nine out of 10 buyers to avoid the tax.

At the same time as encouraging people to buy houses, Housing Minister Caroline Flint said she will continue meetings with the Council of Mortgage Lenders and Treasury ministers to discuss how to help borrowers struggling with mortgage payments.


Ms Caroline Flint said that there is an "urgent need" to build more homes.

In addition the government will shortly confirm locations of surplus public sector land to be used to build 30,000 new homes across England.

National regeneration agency English Partnerships will outline which brownfield sites, such as former coalfields and surplus local authority land, will be used.

Developers who bid for the public sector land will have to provide a high level of affordable housing.

The government has pledged to build an extra 200,000 homes on surplus public sector land by 2016.

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