The Open Market HomeBuy scheme has been questioned after the government revealed that it had not produced sufficient interest through the participants at Halifax, Yorkshire BS, Nationwide and Advantage. In addition the government has proposed a new 17.5% equity loan which is independent of any lender.
The original scheme was launched in October last year. It offers homebuyers the opportunity to fund 75% of a purchase with a mortgage, and the remainder funded by the government and the lender in equal measure.
There has been limited take-up of the offer so the government launches a competition to recruit more lenders to the scheme. It has attracted none.
The new Green Paper tells how the government realise the initiative lacks flexibility for first-time buyers, and it has now come up with a 17.5% loan from the government which can be combined with any mortgage. Eligibility criteria have not yet been outlined, so whether it applies to priority people like key workers – as in the original scheme – is not known. The government has also not said whether any extra funding will be available over and above the £500m set aside for the original initiative.
If the new idea is going to use the original money, then the benefits will not spread very wide, and it suggests the government has accepted its failure to make the original scheme work. It is also hard to see how anyone would prefer the first scheme with the wider accessibility of the newly suggested proposal.
Nevertheless there are some who have benefited from the original scheme, and the four banks/building societies feel it did help a targeted minority.
It is felt that ultimately the success of the new option will depend on the funding behind it, with new money being the key, so that it can be used by a much large number of lenders.
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