Teachers and nurses who are squeezed out of the property market are to be given extra help to buy their first homes.
The Chancellor called on lenders to offer struggling house-buyers fixed-term mortgages of up to 25 years to protect them from fluctuations in interest rates, but brushed aside calls to axe stamp duty for first-time buyers.
Mr Darling said 1.5 million more people owned their homes than a decade ago, but admitted that many needed extra help to get a foot on the property ladder.
He announced that key workers and first-time buyers would from next month be able to buy just 50 per cent of a property through shared equity schemes, rather than the current limit of 75 per cent. That would mean taking a mortgage for half the value of a home, with the Government or the developer owning the remaining share. People buying property through such a scheme would not be liable for stamp duty until they owned at least 80 per cent of their home.
He acknowledged that ministers needed to do more to "promote longer-term stability for home-owners and mortgage-holders".
The Chancellor said he wanted more people – particularly first-time buyers and poorer families – to be offered long-term fixed mortgages which protected them from risk but allowed them the flexibility to move home.
In contrast to other countries, most British homeowners had short-term mortgages lasting for just two or three years. "I want to see more flexible and affordable long-term fixed-rate mortgages for 10, 20 or even 25 years," Mr Darling said.
He said the Government, which was spending £8bn on affordable and social housing over the next three years, was on track to meet its aim of providing three million more homes by 2020. The Chancellor said 40,000 houses were already being built on surplus public land, and sites for another 70,000 had been identified.
The Home Builders Federation said it was disappointed that Mr Darling had ignored its plea to raise the stamp duty threshold to £250,000, which would have exempted 90 per cent of first-time buyers. Stewart Baseley, its executive chairman, protested: "The Chancellor has left the vast majority of would-be first-time buyers high and dry."
The Council of Mortgage Lenders said plans to help key workers buy homes were "potentially welcome", but "unlikely to provide any short-term relief to affordability and entry costs for first-time buyers".
Adrian Coles, director general of the Building Societies Association, said: "Allowing eligible buyers to purchase only 50 per cent of their property is welcome recognition of the challenges first-time buyers face. But we still expect demand to remain low, not least due to the problems associated with saving for a deposit."
Lembit Opik, the Liberal Democrat housing spokesman, said: "Everyone shares the aim of helping first-time buyers, but there's a long way to go between what's been promised and the Government's timid proposed solutions. The Liberal Democrats have long lobbied to increase the availability of shared equity schemes."
'I hoped the stamp-duty limit would go up' - Ross Corry, 25
As a young couple trying to get a foot on the property ladder, Ross Corry and Danielle Docherty were hoping that yesterday's Budget would bring about a change in the way stamp duty is imposed on first-time homebuyers.
The couple are waiting to hear if their offer of £134,995 has been accepted for a two-bedroom flat in Edinburgh, but they were just as anxious yesterday to find out if the chancellor would help them make a saving on stamp duty.
Currently the duty imposed is 1 per cent on anything above £125,000 and there are no exemptions for first-time buyers. Ross, 25, and Danielle, 24, had hoped that the limit would either be raised to £135,000 or that the duty would be scrapped for first-timers. It wasn't to be.
"I wasn't holding my breath," admitted Ross. "But I did have my fingers crossed.
"The rules as they stand don't really help us up here because although you don't have to pay stamp duty for anything less than £125,000, you can't get anywhere suitable for that amount in Edinburgh."Reuse content