Government Announces New First-Time Buyer Assistance

The government has announced new initiatives, which it hopes will improve property affordability for first-time buyers.

A new rental scheme, to be announced today by housing minister Caroline Flint, will see some householders allowed to pay rent for a property for two to three years, before being granted the option to part-buy the home. This could prove an affordable way to get on the housing ladder - although the plan is to begin as a pilot project for just 75,000 households rather than a national scheme.

UK homebuyers have recently been hit by limited mortgage availability and rises in repayment rates due to the credit crunch. This is because banks experiencing difficulty in raising money through the markets in the financial crisis have become much more choosy about who they lend to, a situation which has led to widespread withdrawals of cheap mortgage deals.

Ms Flint said: "We are determined to continue to do everything possible to promote long-term stability and fairness in the housing market. The international credit crunch has created significant challenges not just for the UK housing market, but in other parts of Europe and the United States.

"However, the long term need to provide more homes has not gone away. We have a growing and ageing population and will only see worsening affordability unless we increase housing supply."

Accordingly, the housing minister has also announced the launch of local house-building schemes in areas including east London, Newcastle and Manchester - which will see more new properties built on council land. It is hoped that these construction projects will alleviate pent-up demand for homes, making property more affordable in the long term.