The Government's first time buyer initiative won't kick-start the property market, the Council of Mortgage Lenders (CML) has insisted.
The housing body has said that the scheme will help just a tiny fraction of first time buyers.
In last week's Budget, a new scheme to help 10,000 first time buyers purchase their first home was unveiled.
Buyers with a joint income of less than £60,000 will be eligible for the scheme that will see their 5% deposits boosted by a loan worth 20% of a property's value which will be jointly provided by the Government and housebuilders.
The scheme will be funded by an increased levy on the UK 's banks. However, the CML claims that the new scheme is actually less generous than its predecessor, HomeBuy Direct, which allowed first time buyers to take out an equity loan of 30% of the value of a property.
"The less generous terms for FirstBuy will help make limited Government funding go further, but will deny access to some who would have been able to get a loan through HomeBuy Direct," IT said.
In addition, the reach of the £250 million programme has been described as 'modest', even when measured against a first time buyer market that has significantly diminished in recent years.
"In each of the last three years, first-time buyer purchases have totalled a little over 190,000, figures that are dwarfed by the long-term average of around half a million annually," said the CML.
"If FirstBuy succeeds in helping 5,000 buyers in each of the two years for which the scheme is scheduled to operate from September 2011, that would equate to help for around 1% of first-time buyers in a 'normal' year."
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