No sales to first-time home buyers under £42m 'hire purchase' scheme

A £42million scheme to help first-time buyers onto the housing ladder in London using a "hire purchase" system has failed to result in a single sale, it emerged today.

Boris Johnson launched the government-funded pilot in 2009 pledging to help hundreds of families buy their first homes in the capital, where it is estimated that well over 200,000 people are currently priced out of the market even using shared ownership schemes aimed at low-income buyers.

The First Steps scheme lets people rent a flat at below-market rates, giving them the chance to save for a deposit, before buying it with the help of a cashback lump sum based on the amount of rent they have paid. When Mr Johnson launched First Steps he described it as a "major shot in the arm" for London's house building industry and for its first-time buyers.

However, the original target of building 500 homes by 2014 was subsequently reduced to 391.

Of those, 170 have been built, with more are in the pipeline. Toby Lloyd, head of policy at housing and homelessness charity Shelter, said: "Initiatives that try to address affordability are welcome, but Shelter's research shows that 220,000 Londoners cannot afford even the cheapest shared ownership schemes and that many who take up rent-to-buy schemes are unable to scale up to home ownership. "

A spokesman for the Mayor said: "This is a pilot scheme that was designed with the specific aim of helping people with a flexible and affordable way of getting on to the housing ladder.

"The project has in fact seen huge demand, precisely because it allows people to benefit from discounted rents until they are in the right financial position to buy.

"With schemes like this requiring at least five years to save up for a deposit, it is not surprising that full purchases are yet to be made."