'Rent first, buy later' scheme unveiled

The housing minister has set out new plans to help first-time buyers onto the property ladder.

Caroline Flint on Wednesday announced a range of measures designed to stimulate the flagging housing market.

These included a new pilot project under which buyers will be able to "rent first and buy later" in order to help save for a deposit and meet mortgage payments.

The scheme will be open to up to 75,000 first-time buyer households in England where combined earnings are under £60,000 per year.

Borrowers will be able to rent at 80 per cent or less of the going rate for two or three years in order to put aside money for a deposit.

They would then have the option of buying 25 per cent or more of the property at any time under the scheme.

Other plans unveiled by Flint included allowing councils and housing associations to buy unsold new homes for rent.

More than £200m will be made available to kick-start the scheme as developers are hit by the credit crunch.

The minister acknowledged the downturn in the market but said that demand for homes remains strong.

"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," she said.

"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."