Lib Dems attack 'token' first-time buyer assistance

The Liberal Democrats have attacked the government's new assistance to first-time buyers as "tokenism of the worst kind".

Earlier this week housing minister Caroline Flint announced a new fund to help first-time buyers onto the housing ladder would be made available through the government's Open Market HomeBuy scheme.

Grants of up to £1,500 are to be made available to first-time buyers who purchase a house through the shared equity scheme, with a total of £3 million on offer.

As such a maximum of just 2,000 buyers could be offer financial assistance through the scheme.

"This new scheme is tokenism of the worst kind. The credit crunch is preventing many people from getting a mortgage they can afford, not the worry about solicitors' fees," said Liberal Democrat shadow communities and local government (CLG) secretary, Julia Goldsworthy.

The credit crunch has seen the wholesale finance on world markets restricted, in turn creating liquidity problems for lenders and forcing them to curtail the products on offer to retail borrowers.

This has created a drop in the number of mortgages available in the UK, with only borrowers with the least risk able to secure credit.

The government's response has been inadequate, argue the Liberal Democrats.

"The government has already spent £350 million on a scheme that has helped just 700 families and now Gordon Brown is proposing these new grants will be enough to help families into new homes," continued Ms Goldsworthy.

"With the credit crunch starting to bite, the government should ensure everyone has access to independent advice to prevent overstretched families finding themselves in severe financial difficulties," she added.

Chancellor Alistair Darling announced yesterday he would be forming a working group with industry stakeholders in order to assess what measures are available to the government in order to relieve pressure on the market.