Chancellor to help 10,000 new home starts through equity loan subsidy
Chancellor George Osborne has launched a £250m shared equity scheme for first time buyers which will help the construction of 10,000 homes.
The scheme will see the government stump up 10% of the cost of a house, matched by a further 10% from the housebuilder, as an equity loan. When the property is sold the government will take its share of any profits or losses. The home buyer will be expected to provide a 5% deposit.
The scheme is very similar to the Homebuy Direct product launched by the previous Labour government, which was cancelled when the coalition came in to office. The news follows widespread calls from the housebuilding industry for its reinstatement, with all the major listed builders beneficiaries of the earlier scheme.
Housebuilders have estimated the £2bn worth of sales were generated through the previous scheme, which offered equity loans of up to 30%.