As part of the enhancements, the government has revealed that it will allow aspiring first-time buyers and key workers to purchase a home of their choice on the open market. Applicants will then be able to obtain an equity loan, up to 17.5 per cent of the purchase price. Unlike some other schemes, the borrower will also be able to obtain a mortgage from a lender, with the government taking back its share of the property, and any increase, when the property is sold.
Since coming to power, Prime Minister Gordon Brown has been quick to stress the need to improve the state of the housing market and to help increase home ownership figures within the UK, by widening government schemes and committing to an increase in the number of properties being built.
However, a broker, who wished to remain anonymous, cast doubt on the Homebuy scheme changes.
The source said: “It is very rare that if borrowers get onto this scheme, they will be able to purchase the property outright. Although they can increase their equity in the property as time goes on, house price inflation is usually much more than that of income so most will be unable to completely buy the property.
The intermediary added: “I suppose it would a good move for people who do not want to rent any longer and want to get on the property ladder, but they may be better off saving for a deposit and getting a house the old fashioned way.”
