Homebuy direct scheme could be binned

The HomeBuy Direct scheme, offering first-time buyers loans part-funded by developers and the government to build new homes could be scrapped, according to a Telegraph report.

The scheme was announced in September and became available in March but has helped just 215 buyers despite original projections of up to 18,000.

The Telegraph reports that HomeBuy Direct was intended to help people to buy new build properties by providing them with up to 30 per cent of the purchase price through a loan secured against the property, with 15 per cent coming from the Government and 15 per cent from the developer. The loan is interest-free for the first five years, although borrowers must pay an annual fee of 1.75 per cent, after which interest is charged at inflation plus one per cent. It is available to first-time buyers with incomes of less than £60,000 a year.

The Government defended take up of the scheme, saying that it typically took three to six months for people to go through the house buying process on a new property due to the time lag involved in buying a home off plan, reported the Telegraph.

It added that there were many more people in the pipeline.

Barratt, the homebuilder, said it had received 30,000 enquiries from potential buyers with 500 people going through the scheme.
The Government originally announced £300 million of funding for the scheme, topping this up to £400 million in the Budget as part of its package of measures to help housebuilders.