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News Story

Chains collapsing as first-time buyer scheme runs out of money

Monday 18th May 2009

A government scheme to help first-time buyers has run out of money, leading to estate agents reporting the sudden collapse of property chains.

One agent emailed Estate Agent Today at the weekend saying: “We have discovered to our cost that the government initiatives to help first-time buyers get on the housing ladder, hasn’t got any funding. So despite the likes of Moat Housing Bedford Pilgrims agreeing to first-time buyers that they are eligible for the scheme and sales are agreed as a result, there are no funds.

“We have just lost four sales, so what does that mean nationwide? It is hardly helping the housing market, but adding to the misery of it. Can you find out what is going on?”

For other agents similarly puzzled, as first reported by Estate Agent Today on Friday, the government scheme, MyChoiceHomeBuy, has used up an entire year’s funding after only a few weeks.

Spicerhaart’s office in Wisbech, Cambridgeshire, last Thursday reported seven sales falling through in the day after first-time buyers who thought they had been approved for funding were told it was no longer available.

MyChoiceHomeBuy had £126m allocated to it for 2008/9. The shared equity scheme, heavily promoted by the Government to show its support for first-time buyers, was particularly aimed at key workers.

It allows them to choose any property on the market that is suitable and in good condition. The funding, up to 50%, means that buyers do not have to find a deposit and had proved popular with banks and building societies.

The scheme is operated by a consortium of housing associations, many of whom have posted up on their websites warnings that the money has already run out, and telling first-time buyers not to waste money on surveys or legal fees.

David Cummings, branch manager of Spicer McColl in Wisbech, said purchasers and sellers in the affected chains had been in tears last week. He said: “It’s an absolute nightmare. These aren’t speculators or investors, these are families who thought they had been approved ten weeks ago, and some have ended up wasting money on surveys.”

Metropolitan Home Ownership, just one of the housing associations involved, said it had received 15,000 applications under the scheme which funds first-time buyers on household incomes of £65,000 or less.

MyChoiceHomeBuy was launched in April 2008, and ran out of money six weeks before the end of the last financial year.

This year, long delays have added to the problems, because the housing associations have not yet received their allocations of money. However, when they do, it will only be enough to cover the payments already approved and finalised.

The Government would prefer first-time buyers to use a less popular shared equity scheme, called HomeBuy Direct, for new-build homes.

Paul Smith, chief executive of Spicerhaart, said: “MyChoice HomeBuy initiative was meant to be a tonic to the housing market. But instead of putting sufficient funds into the scheme to make a real difference, first-time buyers are being left in the lurch, with massive delays to their applications or complete refusal in some parts of the country where the money has already run out.”

If your agency has first-hand knowledge of how the scheme has affected you, please contact the editor: rosalind.renshaw@estateagenttoday.co.uk

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Posted By YOUR CHOICE on Monday 18th May 2009 22:23:58

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You have to ask who was offering this schemes..........was it the corporates? YES

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Posted By Rebel on Monday 18th May 2009 21:55:07

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'Moat Housing'? Now, someone's having a laugh.

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Posted By scaleyback on Monday 18th May 2009 17:55:53

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Now I always thought it was good Estate Agency practice to check out the buyers capability to pay for their purchase. having sold a fair number of properties in the last 6 months through MCHB scheme. and even have just agreed another one today. The deal should not be tied up unless the purchaser has an offer letter with the amount of loan on it.I have not know one that has not go through. The first time buyer seems to think just because their application has been accepted they are entitiled to the money this is not the case. As normal even the case they highlighted in the Daily Mirror the lady had found a property offered on it ,had that accepted,instructed a survey and had not even had the deposit offer made by the housing association. Yes she had a mortgage offer but thats all. The scheme works as long as it is used properly

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Posted By TheMadHatter on Monday 18th May 2009 15:24:15

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My company are fighting to save 10 sales as a result of this issue. The incompetent manner in which the scheme has been handled and the lack of morality in the way these purchasers (and in turn their associated vendors) have been dealt with merely mirrors the standards by which the current government run the country. Surely, as other posters have commented, this is worthy of wider coverage than merely an online industry forum. Anyone know the Telegraph's phone number???

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Posted By Rob on Monday 18th May 2009 12:06:53

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Another disaster from Labour. They go on and on and on and on on and on and on and on making mistakes. PLEASE! PLEASE! let there be an early election! Rooster, you are so right in that the wider media need to get their teeth into this storey or I simply see that selective journalism is happening. Not supporting first time buyers is a major issue in current economic times as it stops the wheels of industry turning. It appears that the govenment got a lot of PR when they set up the scheme as it all looked good that they were helping the housing market but potentially escape media attention when they the scheme can not be backed up with a reasonable level of funding. Shameful! All you jounalist out there, here is a good storey.

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Posted By Rooster on Monday 18th May 2009 11:44:17

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Perhaps I'm being unfair but where is the journalism here? Where are the responses from the appropriate government departments following a telephone quizzing from EAT? According to the web site header it is "The voice of the Industry", but it appears to be acting merely as the ears of the industry.

This Government clearly understands nothing about the housing market, the problems it is encountering, it's critical place within the economy, or how to fix it. Instead, it issues sound bite after sound bite, and the media let them get away with it.

I have to say that I am massively disappointed with the way the media - print, TV & online - have paid the usual lip service to the problems without actually doing the appropriate journalism which would allow them to hang the Government out to dry. I am, sadly, even more disappointed with the missed opportunity by the industry bodies, trade press and online sites such as this.

A story such as this should be treated as dynamite by a trade news service, and investigated thoroughly to the point were a shrink-wrapped story can be presented to the wider media to make this Government embarrassed/shamed enough to be forced actually address the problems properly. What a fabulous opportunity for Estate Agent Today to raise their profile with the wider media, by positioning themselves as the voice of authority within the industry. The NAEA has failed [to even try?] to do this during the last disastrous year for our industry.

I'd be grateful for clarification from Rosalind as to whether this is a news site of merely a forum.

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Posted By Doh! on Monday 18th May 2009 11:00:25

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As expected! Government schemes/key workers have always been very high risk and most of them fall through!

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Posted By Real on Monday 18th May 2009 10:58:33

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Everything this incompetent government touches turns to dust!

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Posted By Doh! on Monday 18th May 2009 10:57:30

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Of course - Government schemes/key workers have always been very high risk - most of them have always fallen through!

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Posted By nobby on Monday 18th May 2009 10:37:46

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now im worried...have 2 sales proceeding on this basis

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Editorial Contact Details - Rosalind Renshaw | rosalind.renshaw@estateagenttoday.co.uk | 01252 843 566.