Peter Williams, CML deputy director-general, commented:
"Although the package of measures to address housing supply in the UK may well still fall short of the Barker targets, we are heading in the right direction.
"The new private funding for equity loans, although modest in scale, will give us real experience of operating a public/private support scheme for first-time buyers. If it succeeds, it could over time open up a welcome increase in flexible options across the wider housing market."
Ray Boulger, senior technical manager at John Charcol, said: "The plight of the first time buyer has dominated the personal finance and news pages, and indeed the mortgage industry, for some time now. Today’s much-trailed announcement is a welcome addition to the market that should help some people currently unable to get their foot on the ladder. A lack of first time buyers reduces liquidity in the market and addressing this has been a priority for the Government. After all, less liquidity means fewer transactions and fewer transactions means less tax for the Chancellor!
"However, whilst it is ok in principal, the devil is always in the detail. The questions that need answering are what exactly will the criteria be to decide who has access to this scheme and why is the Government being so parsimonious with the funding — helping only 20,000 first time buyers by 2010 will hardly make a dent in the problem. It is obviously disappointing that the Government will fail to meet its target date of April 2006 for the start of this scheme by six months. This is probably, in part, due to their failure to understand early enough in the process that their creation, the FSA, needed to be involved. Producing compliant Key Facts Illustrations is an additional complication as this will be the first shared equity scheme where the mortgage lender has provided part of the equity funding. In addition, the suggestion that allocation of funds will be controlled regionally does perturb me somewhat. It would not surprise me if we had another postcode lottery on our hands."
A spokesperson from the Royal Institute of Chartered Surveyors said: "Proposals for shared home ownership in the Chancellor's pre budget report will help a small fraction of first time buyers.
"But the scheme is so small that it will account for less than half of one percent of transactions per year, benefiting only 20, 000 buyers over five years.
"If the Government is serious about addressing the affordability question there needs to be a massive uplift in construction, achievable only through a return to direct government involvement in house building and stimulating the private sector to build more. The decline in government sponsored housing over the last twenty years is the single most important factor in the affordability crisis for those most in need. Only 21,000 publicly sponsored homes were built last year, compared to 110,000 in 1980."
