All first time buyers earning less than £60,000 a year are now eligible for the Government’s shared ownership and shared equity schemes, which allows borrowers to part buy a property.

The Government's Homebuy programme, which was previously only available to social tenants and “key workers” such as nurses and teaches, is intended to support first time buyers struggling to get on the housing ladder.

The announcement came as Prime Minister Gordon Brown outlined next year’s legislative programme in the House of Commons today. He also said £200 million would go towards buying new properties either for first time buyers to purchase through the HomeBuy scheme or for social rent.

Around 95,000 people have been helped on to the property ladder since Homebuy began in 1997, although the schemes have been criticised for their inflexible rules and complex eligibility criteria.

The shared ownership scheme, New Build HomeBuy, allows buyers to buy a minimum of 25 per cent and a maximum of 75 per cent of a housing association property, paying an “affordable rate” of rent on the rest. Buyers do not have to pay stamp duty until they own 80 per cent of the property.

The shared equity scheme, Open Market HomeBuy, allows buyers to take a cheap "equity loan" on part of the property and a conventional mortgage on the rest. With this scheme, buyers can part-purchase any house instead of being restricted to a housing association's selection. More details of each scheme are outlined here.

Homeowners can gradually buy more shares in the property until they buy their house outright.

The news will be a glimmer of hope for first time buyers, many of whom have been squeezed out of the mortgage market in recent weeks. The credit crunch means lenders are continuing to raise interest rates and reduce the maximum loan to value (LTV) of their mortgage deals – making it near-impossible for first time buyers to get on the housing ladder without a deposit of at least 10 per cent of the property’s value.

Melanie Bien from broker Savills said: “For the many first time buyers struggling to raise a deposit, this is welcome news. The big advantage to these schemes is that no deposit is required – in the case of shared equity schemes, the equity loan is viewed by the lender as the deposit. So if you have an equity loan or “deposit” of 50 per cent, you will have access to the most competitive interest rates for your mortgage, since rates will be lower if you have a very large deposit.”

However, housing charity Shelter warned that the Government should do more if it is serious about tackling Britain’s housing problems.

Adam Sampson at Shelter said: “These measures are just a drop in the ocean in tackling Britain’s endemic housing crisis. There are still 1.6 million people on council house waiting lists, almost 80,000 households trapped in temporary accommodation, first time buyers struggling to get on the property ladder and thousands of hard working families threatened with repossession."