Grab these cheap home loans fast
By Chris Gilchrist    1st August 2007

The government has made getting a 'shared equity' loan to buy a home easier - but only those who apply soon are likely to get one.

The Open Market HomeBuy scheme is one of hundreds of soundbite New Labour projects. This one, designed to persuade people that the government can help them onto the housing ladder, is typical in that it has delivered far more column inches in the press than homes.

In the past four years a mere 4,000 people have qualified annually for the scheme, which is the usual bureaucrats’ feast and so inflexible that even government ministers have owned up to its failure.

http://www.housingoptions.co.uk/ho2/pdfs/OMHB%20Leaflet.pdf

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The taxpayer will lend you money for free
In its latest Green Paper on housing last month, the government announced a change whereby you could get an interest-free loan of 17.5% of the value of a property from the government, without the complications of the current scheme, which involves two separate loans.

Moreover, provided you qualify for the scheme - which is mainly administered by housing associations - you can get a mortgage for the remaining 82.5% from any mortgage lender in the market.

This is a big advance over the four lenders in the existing scheme, whose HomeBuy loans are generally seen as too expensive. By allowing you to shop around for a mortgage, it enables would-be buyers to get a keen deal and make ownership affordable.

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You need to be 'deserving’ to qualify
There are of course qualification rules. You need to be a 'key public worker’, or a local authority or housing association tenant, must show you can’t afford to buy a home without the loan, must have household income of under £60,000 and must be able to put at least £3,500 of your own savings towards the purchase. You will also be expected to devote all of any savings you have in excess of £10,000 towards the purchase.

The biggest restriction, though, and one that probably explains why it hasn’t already had the usual trumpet-and-fanfare treatment, is that there’s no allocation of extra money, so only those who apply soon are likely to get one of these loans, especially as the Green Paper is riddled with other spending commitments that the government will probably struggle to meet.

As is usual with this government, we can expect the scheme to be re-announced at least two or three times, possibly with a small amount of additional funding. But if you think it might work for you, don’t hang about.

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A green move to the country
The rest of the Green Paper is strong on waffle and aspiration and short on reality. The only thing that will produce more affordable homes in the UK is more building and that means more land being built on. That in turn means fewer restrictions on development.

I have just been on holiday in a bit of rural Sweden that, despite the country’s low population, is far more developed than the average bit of English countryside. Because there were more people living in little wooden houses, each with its own small plot of land, there were more local shops, restaurants and rural businesses.

Few things in England annoy me more than people living in £400,000 thatched cottages in quaint villages whingeing about the closure of their local post office. If those people and their councillors let a few more homes be built in their area, the post office would stay open.

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Time for the 'Good Life’?
What is odd about England is that we have concentrated a bigger percentage of our population into towns and cities than anyone else in Europe. Yet how dull the English countryside is, with its huge featureless fields, compared with the patchwork of smallholdings you see in a lot of France, Germany, even Sweden, at least in the areas where the land isn’t much good for arable crops.

And by the way, greenies, those smallholdings contain a greater diversity of plant and animal life than English farms do. In fact, most English farms are eco-disasters and selling them off in small slices to would-be smallholders would be environmentally friendly. We might even get enough people to go and live in the country to bring London house prices down a bit, although food prices might rise. Now there’s a scary green thought.

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