First time buyers boost from new scheme

A NEW Government scheme allowing first-time buyers to “rent first, buy later” is a step forward in solving the affordable housing crisis in East Anglia, it has been claimed.

Danielle Nuttall

A NEW Government scheme allowing first-time buyers to “rent first, buy later” is a step forward in solving the affordable housing crisis in East Anglia, it has been claimed.

The project, announced by Housing Minister Caroline Flint yesterday, was described by one of the region's estate agents as the “ideal solution” to difficulties brought on by the credit crunch.

Under the Government's plans, households with an annual income of £60,000 or less would be able to rent a home at a discounted rate for two or three years so they can save a deposit.

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They will then be offered the option of buying 25% or more of the property.

The plans are intended to help 75,000 first-time buyers secure their first foot on the property ladder.

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Richard Hair, chairman of the Essex branch of the National Association of Estate Agents, said: “We are very positive about this, particularly in the current climate.

“You have a situation where you're giving people the opportunity to acquire their own homes without the risk of any negative equity. One option of buying later is you tend to get the best of both worlds.

“The situation at the moment is that first-time buyers can afford mortgages but the difficulty they face is no one will lend them money because they need a bigger deposit.

“This is an ideal solution for first-time buyers to acquire their first-time home, with a view to fully owning it at a later date. In principle, it seems like an excellent idea.”

Wil Gibson, chief executive of rural campaigning charity Suffolk Acre, welcomed the scheme but said it did not go far enough.

“We are happy and positive about any initiative that tries to get people into housing because having a decent home is essential to anyone's wellbeing,” he said.

“But we must not get away from the problem that the rate of house building we have is too low and we need to do a lot more to provide decent affordable homes for people. With the credit crunch, that building rate is already decreasing.

“If the Government says house building was insufficient and now that's being reduced it means the gap in provision will still be significant.

“We face a few years of real difficulty and that pressure for housing is still going to be there.”

The new pilot scheme, called Rent to Home Buy, is designed to give more choice and flexibility to first time buyers, and is part of the Government's low cost home ownership schemes.

Housing Minister Caroline Flint said: “The package being announced today will both help people facing difficulties right now, and lay the foundations to help meet the long term housing needs of the country.

“That means being ambitious, but also practical and realistic, acknowledging not only the difficulties faced by individuals and families, but for those who work in the house building industry.”

The new scheme was announced on the same day a new report said the number of households living in poverty in rural areas - including Suffolk - is on the rise.

The State of the Countryside 2008 report, published by the Commission for Rural Communities, said the average house price in a Suffolk hamlet was £384,193 - 12.6 times annual household income. In urban locations in the county, the average house price is £175,971, which is 6.3 times annual household income.

Colin Girling, spokesman for the Suffolk branch of the National Association of Estate Agents, said:

“I think the government scheme has its merits but I don't think it's going to solve a lot of problems. It will solve some.

“We've had partial purchasing before but then we still pay rent out on the half we don't own.

“The real answer is that prices need to come down so they are more affordable.”

He added: “If there is an attitude of wanting to buy then there has to be an attitude of wanting to save and maximise savings without paying out rent.”

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