Alliance & Leicester and Abbey have pulled out of the government's pilot for the HomeBuy scheme.
Joe Wiggins a spokesman for Abbey says the lender has not pulled out of the HomeBuy scheme completely but states: "Potentially, the scheme is a positive step as it's clear that first-time buyers need all the help they can get. Abbey was in discussions with the CML to participate in the trial scheme, which already involved four lenders and is based on only a few thousand mortgages. However, due to the limited size of the trial and the investment in systems development, Abbey felt involvement would not have been cost-effective at this time.
"We await the outcome of the trial with interest and maintain a watching brief. We believe that the scheme does have its limits, however we recognise that first-time buyers are the lifeblood of the housing market, so much more needs to be done with regard to housing supply," adds Wiggins.
Meanwhile A&L spokesman Steve Gracie says the lender had been invited to participate in the initial working group on development of the Homebuy scheme he says the lender attended but has decided not to be a part of the pilot programme.
“We thought then and we think now that it is a worthwhile project and we are going to be keeping a close eye on it to see how the project develops in the future,” says Gracie.
News of the withdrawals came as the Office of the Deputy Prime Minister announces further details of the scheme, which it claims will help 100,000 households to own their own homes by 2010.
The ODPM has announced three proposals for HomeBuy, all based on equity sharing:
Baroness Andrews, housing minister, says New Build and Open Market HomeBuy will offer people choice and flexibility when accessing affordable home ownership. First-time buyers and key workers will be prioritised for assistance in their region.
Andrews claims Social HomeBuy will provide social tenants who do not have or cannot afford the 'Right to Buy' or the 'Right to Acquire' with an opportunity to buy a stake in their homes.
"It is important to remember that councils and housing associations will be able to keep the sales proceeds from Social HomeBuy for re-investment in housing. We want landlords to be able to use the proceeds to make more social lets available and ensure that the scheme does not have a detrimental impact on social-rented provision," she adds.
The government has also announced how £5.5 bn allocated for housing investment available through Regional Housing Pots (RHPs) for the next two years will be split between funding for affordable housing to reduce homelessness and help more people on to the property ladder and to regenerate communities.
The allocations for 2006-07 and 2007-08 reflect the funding advice from Regional Housing Boards. These proposals will also be the basis for the forthcoming bidding round for the Housing Corporation's National Affordable Housing Programme, says the ODPM.
Of the total amount, £3.9bn is being made available for social rented housing and low-cost homeownership schemes across the regions. The remaining £1.6bn will be provided to local authorities mainly for improving existing housing with around £700m of this used to support the government's drive to bring all council housing up to a decent standard by 2010.
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