Housing minister Margaret Beckett has revealed the finer details of the plan, which was first announced in September as part of the government’s £1bn housing rescue package.
The government is making an additional £100m available for the scheme on top of the £300m announced in September. The extra funding is predicted to help up to 18,000 first-time buyers, 8,000 more than originally planned.
More money will be pledged to the scheme by government if there is demand from first-time buyers to do so.
Over 130 developers have signed up to offer the scheme which offers first-time buyers an equity loan funded by both the government and the developer. Sites for the properties have also been agreed.
The loan will be free for five years and cover up to 30% of the purchase price for first-time buyers with a household income of less than £60,000.
Margaret Beckett, housing minister, says: “For many young families who aspire to own a home the difficulties in the housing market have made the step on to the property ladder that bit harder.
“This deal will give them more support and put their dream of becoming home owners within reach. At the same time this scheme will also help developers to weather the tough times in the market, by protecting jobs and helping to keep business going.”
Sir Bob Kerslake, chief executive of the Homes and Communities Agency, says: “There has been a tremendous response from developers to this scheme and we believe there is demand from purchasers who want to get on the property ladder.
“Our flexibility means that we have been able to add in additional funding from the National Affordable Housing Progamme to meet demand and respond quickly to the market.”
The Home Builders Federation worked with the government to develop the HomeBuy Direct Scheme.
Stewart Baseley, executive chairman of the HBF, says: “HBF has worked closely with the government to design a workable product for both customers and sellers.
“HomeBuy Direct will assist in delivering desperately needed affordable housing and protect housebuilding industry capacity – so vital if we are to provide the houses we know this country needs in the future.”
He adds: “We look forward to working with the new Homes and Communities Agency to ensure its speedy and effective implementation.”