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Last Updated: Tuesday, 24 May, 2005, 06:48 GMT 07:48 UK
Brown unveils cheap mortgage plan
For Sale signs
The government would have a share in the equity of the house
More than 100,000 people could get onto the property ladder in the next five years thanks to a part-ownership plan, Chancellor Gordon Brown has said.

Buyers would have to raise as little as half the cost of homes sold on the open market, he said.

The remaining equity in the house would be shared by the government and the bank or building society.

Mr Brown said he thought the scheme could help see two million more people owning homes compared to 1997.

"We've created stability in this country, and we must ensure that the benefits go particularly to young couples who want to own their own homes, who've found that house prices have been high.

"They need some help to get on the first rung of the housing ladder.

"The idea is that building societies, mortgage lenders, the government and the prospective owner share the cost of the mortgage, with perhaps 75% held by the prospective owner."

Thanks to this scheme I've bought a home by myself, something I never thought I'd be able to do<
Anne Mills
House owner

The Treasury said a pilot scheme was already in place for existing properties, but the new programme would apply to newly-built homes.

"That would mean, and I've seen one or two people who've benefited from our pilots, that young couples who never thought they could get into the housing market... can actually get their first chance to buy their own home."


He said the scheme could help the UK achieve a ratio of home ownership higher than the US or Germany.

Peter Williams, of the Council for Mortgage Lenders, said "There's no doubt there's an aspiration for more people to be homeowners, and there is an issue that people can't get into the market at the moment."

But he warned that the scheme would not be able to increase potential homeowners' buying power alone, and that there needed to be more houses on the market, "otherwise everybody will actually lose out".

1984 - 50%
1994 - 55%
2004 - 29%
Source: Council of Mortgage Lenders

He said the buyer would retain the right to sell the house or flat whenever they wanted.

Under the new scheme, average monthly repayments on a 200,000 home could be cut by up to 372 a month.

One buyer on a trial scheme was Anne Mills, a 30-year-old teacher from Lewisham in South London.

No means test

"I'd actually seen this development being built as I walked to work. I used to say to myself that I' d love to live there," she said about the 245,000 she bought a share in.

"Thanks to this scheme I've bought a home by myself, something I never thought I'd be able to do and my mortgage is practically the same as renting."

Paul Watkins, 24, and Victoria Burchett, 20, from Ashford in Kent, bought a 65% share in a 135,000 house.

"This property will mean a better quality of life for both of us. It means that we are not wasting our money on rent and we have a place of our own," Mr Watkins said.

The mortgage help will not be restricted to key public sector workers previously helped by the government, and there will be no means test.

However banks and building societies will have to sift out deserving applicants whose salaries simply will not stretch to the average-priced house, from those simply angling to buy dream homes well above their means, the Observer reported.

Selling chains

The move comes amid signs of a gradual slowdown in the housing market, with recent figures showing house sales in London at their lowest levels in a decade.

The plans reflect government concerns not only over the frustration of first-time buyers, but over the effect on existing householders.

If new buyers cannot enter the market, selling chains will eventually grind to a halt, potentially bursting the bubble for millions more whose fortunes rely on rising property values.

Why Mr Brown feels first-time buyers need help

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