Boost for first-time buyers

DEPUTY Prime John Prescott will today unveil a five-year housing plan aimed at helping first-time buyers get on the housing ladder. Proposals will include building tens of thousands of cheap new starter homes on land owned by the Government.

The price of the average UK home has more than doubled to around £160,000 since Labour came to power in 1997, pricing many people out of the market.

'The only way you can help that is to have a more flexible way of acquiring equity in your home, to give special help to first time buyers and increase the housing supply,' Prime Minister Tony Blair said. Prescott is due to lay out the detail of the plans later today.

It is expected that for the first time, housing association tenants will be able to steadily build up equity in their homes until they can afford to buy them outright. Up to 300,000 tenants will be able to get a portion of their home ranging from 10% to 50% at a discount that could be worth up to £16,000.

If they later want to move or sell their stake, housing associations and local councils will have first refusal to ensure that social housing is protected.

The Social Homebuy scheme will be introduced in April 2006 and will run alongside the right-to-buy and shared ownership schemes that are already operated by housing associations.

The Government's timely announcement follows a report last week from Halifax, the UK's largest lender, that showed 92% of towns are now unaffordable for first-time buyers. The average price paid by novice buyers increased by 16% in 2004 from £112,541 in 2003 to £131,024, with those in the North of England and Wales experiencing the biggest price rises of 27% and 25%, respectively.

Meanwhile, a new survey today showed half of 18 to 29-year-olds are said to be considering buying a house abroad because of the cost of property at home. An average of £101,000 will be spent on a house abroad, compared with £160,000 needed to buy a first home in the UK, according to research for Oceanico Developments.

The pressure is now on the Government, with a General Election expected in May, to help bridge the gap for young buyers, who have become locked out of the UK's property boom. Some lenders have called on Chancellor Gordon Brown to waive stamp duty for first-time buyers.

The rate starts at 1% for homes bought for between £60,000 and £250,000. No change is expected on the tax, which has been a money-spinner for the Government since it came to power in 1997.

{2}The other main plank of Prescott's five-year plan is the proposal for some 60,000 new starter homes on Government land to be offered for sale, reportedly for as little as £50,000 or £60,000.

The homes could be built by private developers or housing associations and the purchasers would buy the house, but not the freehold, significantly reducing the overall cost.

The South East Regional Housing Strategy was also published today, placing an emphasis on building and renovating thousands more homes. The Campaign to Protect Rural England warned that the plans from the South East of England Regional Assembly (Seera), could mean that 240,000 homes are built in the countryside around London over the next 20 years. It wants action to spread wealth - and therefore house-building - to other regions.

A review of future housing needs carried out last year by the economist Kate Barker concluded that between 70,000 and 120,000 new homes should be built each year in order to curb excessive house price inflation. It also recommended 17,000 to 23,000 extra social housing units were needed each year.

Demand for homes in recent years has fuelled, in particular, by people wanting their own place at a younger age. A generation ago, most people did not leave the parental home until they married.

Housebuilders have blamed the shortage of housing on a growing environmental movement, which has fought to protect rural areas.