The signs are not good for shared equity scheme…
Of all recent Government initiatives designed to stimulate the housing market, few have received such a lukewarm welcome as the Homebuy Direct scheme announced last autumn by Communities Secretary Hazel Blears.
This is a shared equity scheme in which a first-time buyer is offered an equity loan of up to 30 per cent of the purchase price, co-funded by Government and the developer. Abbey Chief Economist Barry Naisbitt was not alone in believing that its impact would be too narrow to have any widespread effect on the market. "While these moves undoubtedly have a positive social impact on some lower income and vulnerable people, they are extremely targeted and are likely to have only a limited impact," he said.
Money Week Editor-in-Chief Merryn Somerset Webb was far stronger in her criticism, when she called anyone considering taking such a step "naïve".
As she wrote, "It comes with very little detail for starters. You get the 30% somehow from the taxpayer and from the housebuilders. Then, despite the fact you couldn't afford to borrow it in the first place (that's why a real bank wouldn't lend it to you), you have to pay it back at some point. Worse, you don't know how or when."
These are early days for the scheme, but general signs suggest that housing market recovery will only come once buyers are satisfied that property represents good value again.
For further information call Julia Smart on 0117 9290451 or email jsmart@metcalfes.co.uk
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