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Hope on the horizon for FTBs?

The Government has announced a new scheme designed to help struggling FTBs.

A "rent first, buy later" scheme is heading a series of measures which the government hopes will breathe new life into the housing market.

The pilot project, being announced by Housing Minister Caroline Flint, will be open to some in England with household earnings under £60,000.

They would rent the property at a discounted rate for two or three years, with an option to buy part of it.

First-time buyers have been among the hardest hit by the credit crunch.

Other plans being outlined include the location of new local housing companies which would see councils and developers using surplus land for homes.

Tough times

The squeeze on mortgages caused by the credit crunch has made it difficult for first-time buyers to secure a mortgage deal, even though house prices are falling.

A first-time buyer couple on low incomes must save a year's worth of their take-home pay to buy their first home, the Royal Institution of Chartered Surveyors (Rics) said last week.

A couple in the bottom quarter of earners in the UK would need £27,738 to pay the upfront fees even before paying any of their mortgage, Rics said.

Under the government's plans:

- Households earning £60,000 or less would be able to rent at 80% or less of the going rate for two or three years in order to save up for a deposit.

- They would have an option to buy 25% or more of the property at any time under the scheme, called Rent to Home Buy.

The government had previously extended the shared ownership scheme from key workers to those households earning £60,000 or less.

Bids will have to be made for the rent first, buy later scheme through registered social landlords, but there were no specific numbers as to the number that would be granted.

Building plans

The government hopes that this scheme - only available in England - alongside others will help 75,000 first-time buyer households on to the property ladder.

"The long-term need to provide more homes has not gone away. We have a growing and ageing population and will only see worsening affordability unless we increase the housing supply," said Ms Flint.

"That means being ambitious, but also practical and realistic, acknowledging not only the difficulties faced by individuals and families, but for those who work in the house building industry."

She said that funding, in addition to the £200m already announced, could be made available to buy unsold stock from house builders for affordable homes.

Using the Department of Communities and Local Government's own house price figures, £200m would buy 916 average priced homes.