Nurses, teachers and other essential workers on average salaries priced out of property hotspots such as London and the south-east could soon be offered government subsidies of up to £25,000 to help buy their first home, under plans unveiled yesterday.
Designed for middle England in the run-up to a general election, the proposed starter homes initiative will involve interest-free top-up loans, cash for deposits and help with shared ownership schemes where a housing association might own half the equity.
But with the scheme due to begin operating next summer, the Department of the Environment, which oversees housing, says it is banking on other Whitehall departments and employers chipping in to boost a central fund from which the cash will be distributed.
Although the department has promised £250m, John Prescott, the environment secretary, is hoping that the Home Office and the Department for Education and Employment - responsible for police and teachers respectively - will provide extra funding. Talks are being held with the Council of Mortgage Lenders to see how the scheme will work in practice.
Nick Raynsford, the housing minister, who announced yesterday that the scheme would be designed to help 10,000 workers, has said the initiative might depend on private companies providing subsidies to match government cash in areas of high housing demand, such as the south-east, where property prices rose by 23% last year.
In operational guidance published yesterday, the Department of the Environment said the scheme would be aimed at groups of essential workers - nurses, teachers and the police - in areas where there were "demonstrable recruitment and retention difficulties".
The initiative would be concentrated on homes in the bottom quarter of house prices.
When the scheme was first floated, the idea was for top-up loans of up to £50,000 on houses at the lower end of the market costing £125,000 or less. But a potential buyer would still have to find a commercial lender to give a £75,000 mortgage.
Although it is still not clear who will operate the scheme on the ground, local councils - and particularly government-funded housing associations - are being targeted as the most likely agents to deliver the subsidies.
