Britain's 339 ghost towns for 'affordable' starter homes

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Key workers, as the name suggests, are crucial to the well-being of local communities - a point recognised by the Government a few years ago when it introduced special home-purchase schemes to help public sector employees such as nurses, teachers, police officers and firefighters on to the property ladder.

However, that initiative now looks to be in need of an overhaul, with figures from the Halifax showing that the average house is "unaffordable" for key workers in at least 65 per cent of towns in the UK.

The problem is that property hotspots are rising up all over Britain. Five years ago, homes in 126 out of 519 towns were deemed to be out of the reach of key workers. That figure is now up to 339, with huge rises in the East Midlands, Yorkshire and Humberside. Worst of all is the South-west, where the average home in all 34 towns surveyed is now seen as unaffordable.

Despite all this, the Government's "key worker schemes" are still only available in London, the South- east and the east of England.

"The initiatives were drawn up a few years ago," says Martin Ellis, chief economist at the Halifax. "But house prices have continued to race ahead across the whole country. Government policy has not kept up with prices."

"Many key workers are in an unenviable position," says Melanie Bien, spokes- woman for SPF Sherwins, the affordable-housing division of broker Savills Private Finance. "They often work unsociable hours so need to live close to their place of work, yet this is often in expensive city centres. On top of this, their income is relatively modest, making it difficult to get on the ladder given the spiralling housing costs."

Even if you do live in an area where the schemes are offered, you may not qualify. For a start, your sector must be one that faces recruitment problems, and your household income must be no more than £60,000.

At present, there are two main types of scheme available: New Build HomeBuy and Open Market HomeBuy.

With the former, you purchase 25 to 75 per cent of a purpose-built home, and pay a subsidised rent on the remainder; you may be able to increase your share in the property when you have enough funds. The main drawback is that you must buy one of the designated properties - and these are limited in number.

Open Market HomeBuy is a shared-equity scheme where the key worker raises a mortgage of around 75 per cent of the property's value, with the Government providing the remainder as an interest-free loan. There is a limited amount of funding for these schemes, and much of it has already been committed.

That said, four mortgage lenders - including the Nationwide and Yorkshire building societies - will offer private financing for HomeBuy schemes later this year, which is likely to mean wider availability.

If you are not a key worker but would like to qualify for this kind of help to get on the housing ladder, you do have some options. Some housing associations and not-for-profit organisations run their own shared-ownership schemes for struggling first-time buyers, although they tend to give priority to those in social housing or on local authority waiting lists.

An alternative is the Flexi- share mortgage, launched last week by Advantage, a specialist lender. This complements the HomeBuy schemes but is not a job-orientated product.

Flexishare allows you to borrow a total of 95 per cent of the property's value, with between 60 and 80 per cent on a conventional mortgage loan with rates starting at 5.69 per cent fixed for the first year. You then borrow the rest at a low fixed rate of 2.99 per cent - known as the Residential Ownership Loan. The product is flexible: you can make overpayments when you are in a position to do so.

While the borrower owns 100 per cent of the property, he or she will also owe the lender a percentage of the increase in the property price. "The rates are not particularly attractive," warns David Hollingworth of broker London & Country. "And if your property doubles in value, you could end up having to pay a lot of money to the lender."

He suggests that if there is any way of getting a conventional mortgage, you should do this instead.

To this end, there is a wide choice of home loans for first-time buyers, says Nick Gardner at broker Chase de Vere Mortgage Management. "These include loans of up to 130 per cent of the purchase price, big income multiples, or schemes that let parents help fund the purchase."

'The stress was worth it'

Ronnie Meechan was a charge nurse when he bought his flat in east London through a key worker scheme three years ago; he is now a lecturer in nursing.

He bought the £176,000 property through the Moat housing association, which organised an interest-free loan for 15 per cent of the property's value.

"It was stressful at times," he says. "I had to find somewhere by the end of the financial year to be certain I would qualify for funding. And my own bank would not offer me a mortgage, so I had to look to the Halifax for finance.

"But overall it was a very positive experience, though I know people who have had a harder time of it."