Question: What is the Open Market HomeBuy scheme?

Kate Davies: It's a new scheme which the Department for Communities and Local Government (DCLG) has developed with the CML and the lending industry, to help first-time buyers buy a home of their own where they wouldn't otherwise be able to afford to so.

Under the scheme borrowers will get a 75 per cent mortgage, a 12.5 per cent equity loan from the same lender, and a 12.5 per cent equity loan from the government. The cost for the borrower will be in line with existing low-cost home-ownership schemes.

Question: How does it differ from the shared ownership schemes?

Kate Davies: Open Market HomeBuy is not a shared ownership scheme.

Under shared ownership, the borrower owns part of the property and rents the rest.

Under Open Market HomeBuy, the borrower is the sole owner of the property from the start.

The new scheme is based on the existing HomeBuy scheme, where borrowers took out a 75 per cent conventional mortgage and received a 25 per cent equity loan from the government.

The difference with new Open Market HomeBuy is that there is now a 12.5 per cent equity loan provided by the mortgage lender.

This means that with the new scheme, the government's pot of money will stretch twice as far and potentially help twice as many borrowers because they will be providing funding for only half of the equity loan as opposed to the full 25 per cent under the original scheme.

In addition to Open Market HomeBuy which lenders are involved with, the government has also launched Social Homebuy which allows social tenants to buy a share in their property, and New Build HomeBuy allowing people to buy a share in a newly built property.

Question: Does the CML support this scheme?

Kate Davies: Yes, very much so. We've been talking to the DCLG for some time exploring ways private funding could help contribute to expanding home-ownership.

We think that this shared-equity scheme is a positive step for the housing market.

Home-ownership brings both personal and social benefits.

And the scheme will go some way to meeting the aspirations of a modest but targeted group of first-time buyers, particularly among important groups of people like key workers.

Question: How many people will the scheme help?

Kate Davies: The government estimates that it will help around 40,000 first time buyers over the next five years to buy a home of their own.

The government has allocated £230m to the scheme which is a pilot at this stage. But if the scheme proves to be successful after it's reviewed in 18 months time, it's possible that more money will be made available.

Question: Who is the scheme aimed at?

Kate Davies: People who currently can't afford to buy on the open market.

Ultimately, local HomeBuy agents will decide who is eligible for help.

But the scheme will be targeted at key workers, social tenants, those on the housing register and other first-time buyers identified as a priority by regional housing boards.

The scheme will be focussed on London, the South East and East of England, and may also be available to a more limited extent outside these regions.

Question: Which lenders are involved in the scheme?

Kate Davies: The scheme is being offered in partnership with four lenders – Bank of Scotland, Nationwide Building Society, Yorkshire Building Society and Advantage, which is a subsidiary of the Morgan Stanley group.

Question: Do you think this scheme will have a big impact on the housing market?

Kate Davies: There are over a million house sales every year, so in the overall scheme of things an additional 40,000 sales through Open Market HomeBuy is relatively small.

For this reason we don't anticipate the scheme will have a distorting or negative impact on house prices or the operation of the housing market.

However, it's really important that the shared equity scheme goes hand-in-hand with a real increase in housing supply.

If the scheme is popular, the government needs to make sure there's enough housing stock available.

Question: The government recently created a shared equity task force - what's the aim of this group?

Kate Davies: The task force was set up by the Office of the Deputy Prime Minister (now DCLG) and the Treasury in March this year.

It's been given the job of looking at the shared equity market and the potential for working with the private sector.

The government has estimated a million households want to buy their own home but can't afford to, so this gives you an idea of the challenge facing the new task force.

We support this development because it puts low-cost home-ownership in the mainstream of government-funded activity.

There is growing support for the private sector to help take this agenda forward, and what we need now is a commitment from government to build a sustainable shared equity market.

Question: How would you like to see this work taken forward?

Kate Davies: We are very keen for the potential for shared equity to be explored because it could offer a much more flexible approach to home-ownership.

Ultimately, shared equity could allow home-owners to increase and decrease their equity stake as their circumstances change.

If that were to happen, shared equity could provide a useful strand in our drive for a more sustainable approach to home-ownership.

As well as helping first-time buyers onto the property ladder, in some circumstances reducing the size of their equity stake could be an option for some borrowers who may no longer be able to afford the cost of a full mortgage.

Initially though, we support the launch of the Open Market HomeBuy pilot for first-time buyers.

The scheme will give government and lenders real experience of operating a public/private scheme and is a positive step forward.

However, it does need to be seen in the context of the housing market as a whole and is itself only one element of housing policy.

We will watch the progress of the scheme with interest and hope it's a success.