Home, sweet home loan

Owning your own home was an impossible dream for many people - until the launch of shared ownership schemes. But now the Government has moved the goalposts. By Ginetta Vedrickas

It's changed my life and given me so much confidence," says Louise Matthews. "I couldn't have done it without them." The life-changing event was the purchase of her own house, which Louise bought with Notting Hill Housing Trust under the Do It Yourself Shared Ownership scheme (Diyso).

Under Diyso buyers pay from 25 to 75 per cent of the purchase price, and the housing association buys the remaining share. It is a part-buy, part-rent system that lets you choose a property on the open market. The scheme was set up in 1992 to give those on low incomes a chance to own their own properties, and now there are thousands of successful shared ownership purchases across the country.

In 1992 Ms Matthews heard about the scheme from a friend and applied to Notting Hill Housing Trust. They assessed how much she could afford, and in 1993 Ms Matthews bought a 50 per cent share of a pounds 97,000, three- bedroom, end-of-terrace house in Ladbroke Grove, west London.

However, the Government recently announced the unexpected abolition of Diyso and its replacement with a scheme called Homebuy. Under the new scheme buyers pay 75 per cent of a property's purchase price. They pay no rent but receive an interest-free loan for the remaining 25 per cent. The Government says that Homebuy will simplify access to low-cost home ownership through "registered social landlords", but many housing associations disagree.

Notting Hill Housing Trust is one of the largest providers of Diyso properties in London. Steve Coleman, its director of home ownership, says: "The new system will operate at the expense of those further down the scale not able to afford 75 per cent." He accepts that Homebuy is a great deal for those who can afford it: "Who wouldn't like an interest-free loan?"

Mr Coleman believes that in areas with high property values, like London and the Home Counties, the new system will exclude many potential buyers: "It might work north of Watford, but I think it should stop there." The trust has statistics showing that over the last three years 55 per cent of Diyso purchasers would not have been able to afford Homebuy, and it is puzzled by the Government's lack of consultation with housing professionals: "We are adamant that Homebuy a big mistake."

Over the last five years Ms Matthews has totally refurbished her home, which she now owns outright and is about to sell for around pounds 200,000: "No surface has been left untouched." Her property has dramatically improved, as have her circumstances. Before buying she was in rented property with her son, Sam. Now married she is about to move, within the area, but "further up the evolutionary chain", having been "massively helped" by the sale of her house.

Ms Matthews' is a success story, but would it have been under the new system? "It's very sad. I couldn't have afforded 75 per cent and couldn't have done it alone." She stresses the positive effects of home ownership and is puzzled by the Government's motivation for the change: "They say people must believe they are stakeholders in society, and I can't think of a better way of doing that than by helping someone buy their own place. It's given me such a sense of security."

Other buyers echo Ms Matthews' sentiments. Rupert Procter bought a 50 per cent share, all he could afford after his pounds 6,000 deposit, of a terraced house in Tooting that cost pounds 69,000. Now a successful actor (he's currently appearing in Channel 4's Ultraviolet and recording the next series of Peak Practice), he was unable to get a mortgage because of his profession's notoriously unreliable incomes. Rupert is surprised by the Government proposals: "I was horrified when I heard. The scheme let me carry on working and keep a roof over my head but I couldn't have afforded 75 per cent."

Mr Proctor did not have the option of moving further out to a cheaper area. "My agent is in Oxford Street and all meetings for any good film, theatre and TV work start in London."

Rachel Terry is a researcher of shared ownership funding. She supports Homebuy but with reservations: "I can see why they want the simplest possible scheme for administrative purposes, but I don't think that it would be too complicated to vary the amount of the loan for different postcodes."

Ms Terry wants associations to loan 25 per cent of the purchase price across the country but believes that in London this should increase by "up to 35 per cent for certain exclusive postcodes". She wants to see housing associations "lobby for changes to loan levels", which she believes, if they are changed, will reduce the 55 per cent of current applicants not able to buy to just 5 per cent.

Does Ms Terry believe that lower-income groups will suffer under the new scheme? "I worry about people who may not be able to afford the upkeep of their properties, and some associations are accepting people on lower incomes than I would like to see." Steve Coleman has evidence that Notting Hill Housing Trust is not a culprit, saying: "We serve people on lower income levels but have the same level of repossessions as building societies."

Notting Hill Housing Trust: 0181-357 5000