New home loan scheme for cash-strapped staff
New government equity loans, worth 17.5 per cent of the purchase price, have just been made available to teachers and other keyworkers with a household income of under pound;60,000.
For a teacher buying a pound;255,603 property the average price of a home in Greenwich, south London this would amount to a handout of pound;44,731.
Under the scheme, which is an extension of the Open Market Homebuy initiative, buyers can present the loan to any mortgage lender as a sizeable deposit. The only catch comes if the buyer subsequently moves. Their needs will be reassessed and if the area is judged affordable, they may have to pay back 17.5 per cent of the property's sale value to the Government.
Buyers using the scheme are not restricted to buying certain types of homes, but can only have one more bedroom than they need.
It is uncertain how many people are expected to take up the 17.5 per cent offer, which has not been widely promoted. The Department of Communities has not made any extra money available.
Mortgage brokers specialising in affordable housing say the new loans have many advantages over the other "shared equity" scheme launched under the Government's Open Market Homebuy banner last October.
Melanie Bien, a director of mortgage brokers SPF Sherwins, said take-up had been low because the scheme "did not give enough flexibility to buyers and cut them off from some of the best deals".
Becky Routh, 29, a teacher at Tyssen community primary in Hackney, east London, tried to get a flat through the first version of Open Market Homebuy scheme but found it frustrating. "I was told that I could afford a property worth Pounds 143,000, which is totally ridiculous. You can't afford anything with that in London unless you spend lots of money doing it up."
She eventually opted for buying a flat in Clacton, near Hackney, under the shared ownership scheme, paying rent to a housing association and a mortgage.
The maximum salary for a main scale teacher in inner London is just Pounds 32,820, making it difficult for a single teacher to afford property in the capital, where the average house price is now pound;339,000.
The Government claims it has helped more than 8,000 teachers on to the property ladder since 2001.
* www.direct.gov.uk for more details or contact local housing associations