First-Time Buyers: £970m plan to lower first rung of the housing ladder

The Government's commitment to helping first-time buyers get on the housing ladder will cost £970m over the next two years, with three schemes designed to help 35,000 people.

The Office of the Deputy Prime Minister (ODPM) has confirmed plans announced in December's pre-Budget report to expand the Open Market Homebuy Scheme.

Under the current scheme, borrowers can apply for a standard 75 per cent mortgage on a property from a conventional lender, with a further 25 per cent loan from the Government.

This second chunk of borrowing is interest-free, reducing the cost of the house purchase, but the Government is then entitled to 25 per cent of the proceeds, including any profits, when the property is sold.

HBOS, and Nationwide and Yorkshire building societies will help the Government double the reach of this scheme by providing half of the 25 per cent interest-free loans, on the condition that the Government takes the first hit if house prices fall in future.

This initiative should eventually enable 20,000 extra people to get on the property ladder, Mr Brown said. Two other previously-announced schemes, Social Homebuy and New Build Homebuy, respectively aimed at council or housing association tenants and people buying newly-built homes, will also help.

The ODPM also said it would announce next week the details of a new taskforce on shared equity. It is also committed to making publicly owned land available for house-building, with space for "30,000 new homes over time".

Peter Williams, the deputy director general of the Council of Mortgage Lenders, "welcomed the Chancellor's continued commitment to delivering shared-equity schemes".

Case Study, First-time buyer: 'We might be able to get some help from the housing association'

By Martin Hickman

Colin Pickard, a customer adviser at a building society, is looking to buy a house in Lancashire with his Polish girlfriend, Kinga Przybyla.

Lives They rent a house in Preston with two housemates.

Age Colin is 23 and Kinga 22

Income Colin earns £15,600 a year from his job at the Nationwide Building Society; he also receives an annual bonus of about £1,000. Kinga's annual salary from her farm assistant job is £11,500

Outgoings Monthly, the couple pay £300 rent, £54 council tax and £25 for gas and electricity.

Politics Neither has voted. Colin feels that politicians have little to offer him.

Hopes for the Budget Colin wanted to see a fall in the cost of petrol. Any help for first time buyers would be welcome - the couple are planning to buy a property worth about £115,000.

Effect of the Budget The couple will be about £69 better off in total, mainly through changes to income tax (£76) and National Insurance (£31). As smokers they will be £33 worse off a year.

Reaction "I do think it will help people but probably not me. There are a lot of people who want to get into the housing market. I suppose if we weren't able to borrow quite as much as we plan [for a house] we might be able to get some help from the housing association [under the private equity scheme]. I'm very happy about the freeze on fuel duty. The car is something I rely on. The penny on beer wasn't too bad but we do like to drink wine. I don't really think about duty on cigarettes very much. It might help me to give them up."

* Treasury Budget site

* Chancellor's Statement in full