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NEW SUPPORT FOR LOW COST HOME OWNERSHIP

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A major scheme to help low income families and key workers into home ownership was today boosted with the announcem...
A major scheme to help low income families and key workers into home ownership was today boosted with the announcement of a new private sector partner.

Advantage, a Morgan Stanley group company, will join Halifax Bank of Scotland, Nationwide and Yorkshire Building Societies, as a private sector partner in the Government's new Open Market HomeBuy scheme, which will increase the purchasing power of eligible households by around 25%.

From October, households qualifying for the scheme will be able to apply for a regular mortgage topped up with an equity loan. This will allow thousands more families to get a first step onto the property ladder.

Currently, a family on a combined income of£35,000 could typically obtain a mortgage of just£122,500 independently. If eligible for Open Market HomeBuy, they could potentially buy a home valued at between£150,000 and£180,000.

The government's Shared Equity Task Force is today also encouraging more private sector companies to work with government to develop schemes to make home ownership more affordable for families priced out of the market. This follows the announcement that Advantage is also making its own private sector equity product available to all first time buyers and existing home owners.

Housing minister Yvette Cooper said:

'As house prices have gone up, more and more and families who could keep up with regular mortgage payments can't manage that first step onto the ladder. That's why we think there is scope for more private sector companies to come forward and work with us to develop shared equity schemes to help families get started.'

No deposit is required to participate in Open Market Homebuy, and monthly repayments would start at around 20% less than buying without assistance, as lenders and Government would expect to benefit from any increase in the value of their equity share in the property.

Lenders will be providing at least half the funding for the equity loans under the scheme with government making up the rest. This innovative approach will enable more than double the number of households to be helped into homeownership with the same amount of public money.

The new Open Market HomeBuy product will be available to local authority and housing association tenants and key public sector workers including nurses, teachers, social workers and police officers.

The scheme will be managed by HomeBuy agents, who provide a 'one stop shop' for affordable housing options in their local areas.

Steve Nunn, an operations director at Tower Homes, a London HomeBuy Agent said:

'The expansion of the Open Market HomeBuy scheme is fantastic news.

Involving private sector lenders means that we can stretch the funding we receive from government to help many more households get onto the housing ladder. At the moment interest in Open Market HomeBuy far outstrips supply so this new scheme will really help us meet this pent up demand.'

Notes

1. Open Market HomeBuy is one of three HomeBuy products. Social HomeBuy enables tenants of local authorities and housing associations to buy a share in their current home at a discount. New Build HomeBuy will enable people to buy a share of a newly built property paying a rent on the remainder (this includes the First Time Buyers Initiative which uses public sector land).

2. The following groups are eligible for Open Market HomeBuy:

* Social tenants and those on the housing register: tenants of councils and housing associations, and those who are on the housing register, waiting for a council or housing association home to rent.

* Key workers: those working in the public sector in health, education or community safety - such as teachers, nurses and police officers - in areas where high house prices are affecting recruitment and retention. If participants leave qualifying employment, they will have to repay the Government's assistance and remortgage to a standard mortgage.

* Priority first time buyers: households who can't afford to buy their own home, who have been identified as eligible for assistance by the Regional Housing Boards.

3. HomeBuy Agents are appointed housing associations who will provide a 'one-stop-shop' and point of contact for affordable housing options in a given area in England and handle the entire application process for the Open Market and New Build Homebuy products. A list of the HomeBuy Agents and their contact details are available on DCLG's website

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