Key staff may get homes help

7th April 2000 at 01:00
Interest-free loans and low rents could draw teachers back to areas with high house prices, reports Nicolas Barnard

INTEREST-FREE loans and cheap rents may soon help teachers move into areas with soaring house prices.

Deputy Prime Minister John Prescott this week launched his long-awaited housing Green Paper which proposed ideas to help "key workers" such as teachers and nurses with the cost of homes.

But his Department for the Environment, Transport and the Regions was quick to quash reports of pound;50,000 interest-free loans. No cash has been earmarked - and Mr Prescott must await this summer's comprehensive spending review.

The paper - Quality and choice: a decent home for all - recognises that public-sector workers are fast being priced out of the booming housing market in the South-east and in major cities. House prices have risen 13.5 per cent in the past year, said the Halifax on Wednesday.

The National Housing Federation this week reported that a home was now out of reach for a newly-qualified teacher in more than three-quarters of the UK, where, on average, a salary of at least pound;20,000 is needed to get a 95 per cent mortgage. In eight counties, households need an income of more than pound;40,000 to fund an average mortgage - with London figures being even higher.

Prescott plans a Government-backed "starter" home initiative, and is inviting local autorities, housing associations and other bodies to come forward with ideas.Housing minister Nick Raynsford hinted funding for the scheme could be in place as early as the autumn, with legislation in the Queen's Speech if necessary.

The scheme would be reserved for key workers in "hot spots" where prices are high, and would only cover homes in the bottom 25 per cent of the market.

Help could include interest-free loans, cash incentives, development grants and agreements with developers to build low-cost homes. Any scheme must not fuel house-price inflation in the area, and the housebuyer must be able to meet repayments.

Government sources said that, if teachers had to repay the loan on leaving the profession, the scheme would act as "golden handcuffs", binding them to their jobs.

Housing associations in other parts of the country - where large estates stand empty - are to be encouraged to take in teachers and other key workers. At present most do not meet the social-need criteria to get such properties.

Mr Raynsford said: "We're open to imaginative proposals... We'll know roughly in July the kind of programme that's appropriate... we want to take (this) forward as quickly as we can."

Copies of the Green Paper available, pound;10, from the DETR, tel. 01709 891318; summary leaflet available free from 0870 1226 236, or e-mail

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