Fund helps only 1,300 first-time buyers in the capital

THOUSANDS of first-time buyers are to miss out on a government scheme aimed at helping people onto the housing ladder.

Housing minister Margaret Beckett announced that 18,000 people across the country will benefit from the £400 million initiative. But just 1,300 first-time buyers in London will be able to get the keys to their first home through the HomeBuy Direct programme.

The capital is the least affordable location in the UK, with average house prices still twice as high as elsewhere.

MPs say the scheme will do little to alleviate London's housing crisis.

Only 20 developers have agreed to participate in it and offer their unsold new homes in 40 areas of the capital.

Shadow housing minister Grant Shapps said: "This is a rehashed announcement which will only help a tiny number of Londoners. He said ministers had already unveiled the scheme for first-time buyers whose total household income is under £60,000.

Buyers must raise 70 per cent of the sale price using a conventional mortgage. The rest will take the form of an "equity loan", free to the buyer for the first five years and covered by the Government and the developer.

Mrs Beckett said: "We have helped more than 110,000 people buy their own homes through shared equity and shared ownership since 1997.

Her officials admitted HomeBuy Direct was first unveiled in September but said £100 million had been added to its budget and developers signed up.