It seemed like a straightforward way to help stem the high turnover of public sector workers in the South-east. Offer teachers, policeman and health workers interest-free loans to help them buy a place to live. But when the scheme closes in March next year, will the £250m Starter Home Initiative be judged B+ or D-?
From all the negative publicity surrounding the programme since its launch in 2001, one might conclude that it has been a flop. Fewer than 3000 key workers in London and the South-east took up the offer, against a manifesto target of 10,000. Spiralling house prices have meant that, even with a deposit of £10,000, property is simply out of reach of many first-time buyers. Others have criticised the plethora of schemes for confusing consumers and diluting the message. The initiative has also been pilloried by MPs and housing experts for not tackling what's at the heart of the affordability gap – a housing shortage. But even as John Prescott launches a publicity drive to ensure that the money gets spent, there are signs this week that loans are at last being snapped up (page 7).

Housing associations responsible for allocating money put this down to a cooling of the housing market, which puts their clients in a better position, coupled with the doubling of the sum that can be made available as a loan. After a lot of footwork, associations have the administration in place to work effectively with employers and target those eligible for this kind of financial help.

If there is to be another round of funding, as Prescott has pledged, lessons have to be learned from the first rounds. As the low-cost homeownership taskforce has already identified, the number of schemes need rationalisation to give consumers more clarity. There is a case for universal branding rather than the existing multitude of names and forms. There also needs to be more imagination in the way the scheme is promoted – perhaps lenders could do more to help. And perhaps it's time for the government to listen to the Royal College of Nurses, which wants to extend the project to the overseas staff the NHS now depends on.

From all the negative publicity surrounding the Starter Home Initiative, one might conclude it has been a flop

Finally, there needs to be more assessment of whether the initiative has reduced staff turnover. Although many in the housing market will argue that simply handing over a deposit is not a cost-effective way to subsidise housing, it is the best way of offering consumers the most choice.

Source

Housing Today