The scheme, which involves areas of land being owned by a local community group and buyers purchasing a house built upon it, could result in radical reductions in purchase price as land costs can make up nearly 60 per cent of the total property price.
However, the idea has been met with reservation from the mortgage industry.
Neil Johnson, head of PR and policy at the Building Societies Association (BSA), commented: “It’s a good idea in principle but whether it will work in practice is another. The big cost is buying the land but how to you get the cash to do this? Also, because the land price is excluded, I don’t see how you could build up enough equity to move on. In addition to this, would lenders even lend on it? The value would depend on the condition of the property and if it is not looked after, the value could go down.”
Paul Fincham, senior media relations officer at Halifax, said:
“Clearly there is a shortage of good quality low-cost housing stock in the UK. Any proposal to meet the demand must be looked at very carefully.”
