UK Plans State Funded Mortgage Scheme

The UK government has joined forces with more than 100 home-builders to help first-time buyers get a foot on the housing ladder.

The government-backed scheme costing £500 million will help reduce the size of required deposits to 5% of the property's value, with the government and home-builders each providing interest-free loans equivalent to 10% of the property’s value for five years.

According to the UK Housing Minister Grant Shapps this new plan should help up to 10,000 people get a foot on the  housing ladder. Mortgage approvals for first-time buyers have reduced by over 50% since 2006 to just 194,600 in 2010, according to figures issued by the Council of Mortgage Lenders.

Developers have suffered reduced sales because lending restrictions make it easier for first-time buyers to purchase existing homes rather than new properties. This new government backed scheme is only available to households with annual incomes of less than £60,000.

It's expected that Barrett Developments plc, Persimmon plc and Bovis Homes plc will all offer properties through this new plan, with the first being expected to hit the market by September. The loans are repayable after the owners sell the property.

Meanwhile Barratt Developments plc has just announced a new project which may appeal to Arsenal fans, as they have signed contracts to build 375 luxury homes right next door to the Emirates Stadium in North London.

They are building three residential towers containing units ranging from studios to 1000 ft.² penthouses, and Alistair Baird, regional managing director of Barratt London said the properties will be "literally yards from the stadium," and he expects them to become highly sought after by Gunners fans.

Arsenal FC director, Ken Friar says this new development is "the last piece in the jigsaw in our new stadium project which has delivered huge regeneration to the Borough of Islington."