Open market homebuy cash will be targeted at first-time buyers of new build properties
Healey axes £182 million homebuy scheme
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Uptake of homeownership schemes could decrease dramatically after the government revealed plans to scrap a flagship scheme that has helped more than 14,000 people onto the property ladder.
Housing minister John Healey said in a statement on Tuesday that he planned to withdraw backing for the open market homebuy scheme in order to concentrate on new-build homeownership schemes .
Mr Healey’s plan has angered housing associations, which administer homebuy schemes.
Graeme Moran, managing director of Metropolitan Homeownership, said: ‘It beggars belief… If we did not have an open market programme the number of people housed would fall by 70 per cent.’
The scheme was ‘hugely popular’, he said, and through it MHO had helped more than 10,000 people since 2000.
The number of households the housing association would now house per year would decrease from 1,500 to 400, he added.
Open market homebuy has received £182 million for 2009/10 to help 4,525 households.
So far this year nearly 12,000 households have been helped through four other homebuy schemes, which have been allocated £492.4 million.
Lucy Thornycroft, policy officer at the National Housing Federation, said: ‘This is disappointing news, as the open market homebuy schemes were very popular with high levels of public demand.’
But, she added, it was ‘understandable’ in the current financial climate that ‘the government wants to focus investment on schemes that support the delivery of new homes’.
Mark Vaughan, director of homeownership at Notting Hill Housing, said it was ‘never a good thing’ to take a product off the market, especially one so popular.
But he added: ‘The higher earners will also be attracted to new build homebuy because there isn’t any other [viable option] available.’
Richard Hill, director of investment and renewal at the Homes and Communities Agency, said: ‘[Mr Healey] has taken the difficult decision to concentrate funding for homebuy on products which help first-time buyers and simultaneously maintain activity in the house building sector through new build.’
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Readers' comments (10)
Harry Lime | 03/07/2009 2:00 pm
I certainly wouldn't want to be working in a Homebuy Agency at the minute - the figures speak for themselves and I wouldn't be surprised to see job losses in 6 months or so. The overwhelming reason Open Market was popular was because, given the choice, most homeowners don't want to be surrounded by other forms of Low Cost Home Ownership, and the inevitable numbers of social rented units that would come with it. Harsh, but true.
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OLite | 03/07/2009 4:00 pm
People preferred Open Market Homebuy because a) they could choose where they lived rather than being restricted to specific developments and b) they could buy second hand homes which are cheaper than new build, c) there was more room to negotiate on price in the open market and d) there was no confusing and expensive rental/service charge as with shared ownership.
In my experience being surrounded by other forms of social housing was not a major concern for potential homebuyers compared to the reasons above.
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AC Preston | 03/07/2009 4:56 pm
I'd have to disagree with you OLite, I have tried and failed to go through the Open Market Homebuy. That is the only scheme I pursued as it was the only one I could find that would allow me to move where I liked rather than where I was told.
I would rather move somewhere that has a good reputation rather than investing in the unknown. Any newbuild development with other social housing is bound to be a breeding ground for contempt as both owners and tenants will be marginalised.
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michael read | 03/07/2009 6:35 pm
OLite is nearly there.
Homebuy was an economic nonsense, for the potential buyer if they really understood what they were getting into.
I find the claims for its success surprising, if not deliberate misrepresentation of the facts as I have come to expect fromt this government.
Inside Housing has reported on the low take-up with hundreds of properties left with the HAs.
Is the government really trying to saying we're closing it down because it was such a success. Yeh, right.
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WMA | 06/07/2009 12:18 pm
Open Market Homebuy has gone the same way as its extremely popular predecessor - DIYSO. People do prefer open market products.
However, this does hopefully mean that disappointed applicants will focus on new build homebuy, which has largely been unsupported in funding terms in comparison with HomeBuy Direct, which requires applicants to have much larger incomes.
The only RSLs that will be disappointed in this are those that are Homebuy Agents.
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AO | 06/07/2009 2:19 pm
The Government could have kept the Open Market Homebuy going by limiting it to new build properties only on the open market.
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Pipplington | 06/07/2009 10:03 pm
I purchased my home with open market Homebuy in 2001 and subsequently managed the allocation of Homebuy funding for a HA for a couple of years up until the Zone Agents came into being, allocating £1.5 million in funding in the final year.
I loved the scheme, both as a recipient of the funding and from the aspect of being able to help other first time buyers onto the property ladder.
The benefit of Open Market Homebuy? the ability to choose a property in an area of your own choosing and the style of property that you choose, making your home individual and different to all the rest.
As a Lettings Officer, letting both new build and relet older properties. I wouldn't want to be forced into a corner and be only able to receive funding to buy only a new property in a designated area. The new builds are boring boxes, nicely finished maybe, but boring non the less and you and your neighbours are all occupying the same style of "box" I visit many older properties in the course of reletting them and they are wonderful, all different and individual, with quirky layouts and the promise of the occupyer being able to live in an individual home, that for the majority of the time offers a property much larger than a new build.
Had I been taking the opportunity of Homebuy funding today I would not be enjoying the luxury of an enclosed, private, mature 100' x 50' garden on these long summer evenings.
I think it is really sad that this scheme is to be no more and I feel sorry for those people out there who have missed out on this opportunity, particularly at a time when more assistance is needed to help first time buyers onto the property ladder.
I guess as a Lettings Officer I can only expect my workload along with demand to increase substantially as peoples housing choices become more limited, the turnover is already up 35% on the same period last year.
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zoomy | 07/07/2009 10:28 am
I have just been allocated funding through the own home scheme (having had an offer accepted on a property) and am so relieved to have just squeaked through!
I am a young proffessional and expect my wages to rise over the coming years so see this not as a lifetime home but as being a stepping stone until I am earning more and can afford something bigger and better.I desperately didn't want a new build (espescially not one surrounded by social housing) as they can be difficult to re-sell.
I was living at home with parents and driving 1hr 30 to and from work every day as there was no way I could rent and save for a deposit. Without own home I would have been doing this for another 3 or 4 years to save up a deposit (bearing in mind I've done it for 3 to pay off my student debts!)
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FW | 14/07/2009 10:08 am
The simple fact is that Open Market HomeBuy is an expensive scheme to run and does not do anything to alleviate the wider housing problem of inadaquate housing supply. This is why the product has been pulled. Investing in New Build HomeBuy kills two birds with one stone, low cost home ownership and an extra unit added to the British housing stock. I'm just surpised that they did not do something sooner.
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Lisa | 11/08/2009 4:50 pm
I live in a very very rural area of Suffolk. My husband is a nurse at the local hospital, and I have a 10 year old son. I live in a small village with very little in the way of new-build development. In fact there are no new-build schemes in our local area that are part of the home buy scheme - the few houses that have been built are executive homes built by greedy developers.
We live in a tiny, cramped 2 bedroom rented house. We would like to have more children, but we have no space. We cannot afford to buy on the open market, as we do not earn enough to qualify for the large mortgage needed to afford a property in our village and the prices are inflated due to demand for holiday homes.
We applied under the open market homebuy scheme back in February this year. We were assured that it was a simple, straightforward application that would be dealt with within 6-8 weeks. Since then we have been pushed from pillar to post by various different agencies, until we received the news from the third agency our application had been passed to that the funding had been withdrawn.
We feel let down. As a key worker, my partner had been told that he would have no problems in obtaining a loan, but now we have no chance of buying our own home. Council housing is non-existent, and moving outside the area is impossible due to my son's schooling, childcare arrangements, my job and the fact that there are no new build properties at all here, and the ones that are available in Suffolk are nearly 50 miles away from where my partner works.
I don't care about living near social housing, and besides which - there are no council or housing association properties within 12 miles of my village - they just don't get built. All I want is a home big enough for my family to grow. It's something we've been planning towards and now it's unlikely to happen. I'm devestated.
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