Five months of talks over the existing ‘shared equity’ scheme ended last week and proposals have been submitted to the Treasury and the Office of the Deputy Prime Minister (ODPM). John Prescott launched the plan in April claiming the scheme would lift an extra 20,000 ‘key workers’ onto the housing ladder by 2010.
However, Peter Williams, deputy director-general of the CML, said: “It is very hard to predict what its [the government’s] decision will be. We’ve gone as far as we can and now it’s up to the government. It will be a complicated call and it has to decide if it’s the best use of public money.”
Under the ‘shared equity’ proposals, both the lender and the government would put up around 12.5 per cent of a home’s purchase price thereby cutting the cost for first-time buyers by 25 per cent and reducing their mortgage payments. Owners could later buy out those stakes at the prevailing market price.
Abbey and Alliance & Leicester pulled out of disc-ussions with the ODPM in August. Remaining lenders include Halifax, Nationwide and Yorkshire Building Society.
Williams added: “The government has to decide whether what’s being offered will be attractive in the marketplace – it’s a judgement call. We don’t expect to know for another month.”
Tony Jones, managing director of Pink Home Loans, said: “This doesn’t appear to be a commercially viable commitment for lenders. It seems like a PR exercise on behalf of the government and the fundamentals of where such housing is to be built has not been addressed.”
Andy Frankish, managing director of Mortgage Talk, said: ‘This initiative is just scratching the surface of affordable housing. More needs to be done.”
