Cautious welcome for Rent to Home Buy scheme

Monday, 04, Aug 2008 12:03

Industry insiders have cautiously welcomed government assistance offered to first-time buyers as part of a concerted attempt to invigorate the stalled property market.

Speaking last month, housing minister Caroline Flint confirmed the extension of the Rent to Home Buy scheme - which had previously been aimed at key workers - to include all would-be buyers with a combined income of less than £60,000.

Under the terms of the scheme, householders would be able to rent at 80 per cent or less of the going rate for two or three years in order to save up for a deposit, with an option to buy 25 per cent or more of the property at any time.

It is hoped some 75,000 first-time buyers could secure assistance under the scheme.

However, while welcome, the scheme may suffer from geographical subtleties in the property market.

"In some parts of the country, like in the south of England, it won't have much impact," said Helen Adams, managing director of campaign website FirstRungNow.

"Even at £120,000 that would be too low in the south, so the threshold should certainly be reviewed and maybe even its structure changed to give more help."

In part, the government policy is aimed at resuscitating the market in order to help achieve the target of building three million new homes by 2020.

With a fall in demand curtailing house price growth, developers are mothballing new-build projects and reducing supply. This has compromised targets.

"It's a very difficult task. When they've banded these big numbers around before the uptake has never really been what they've hoped for partly because people don't really know of, or understand the schemes, but partly also because of limitations," continued Ms Adams.

"While limitations have been reduced in that households earning under £60,000 can now be included, it's still rather bitty and confusing for first-time buyers which I think will reduce uptake."

Chris O'Toole