A survey of first-time buyers has raised doubts about the effectiveness of a government scheme to help young people buy their first home.

Only 1 in 20 first-time buyers said they were planning to purchase through a shared ownership or key worker scheme. Just 7 per cent said they plan to buy in a stamp duty-exempt regeneration area.

In March’s Budget, Gordon Brown, the Chancellor of the Exchequer, announced an expansion of shared equity schemes to help all first-time buyers and not just key workers. The Chancellor said there would be an additional £970 million to help 35,000 young people part buy their first home. The government is also piloting minimum holdings as low as 25 per cent.

The property industry broadly welcomed the move but so far, only a small percentage of banks and building societies are willing to lend when shared ownership applies.

In the survey, 42 per cent said they would receive financial help from their parents while 1 in 10 will take a second job to help boost their savings.

Duncan Pownall, mortgage development manager at Bradford and Bingley, the bank that commissioned the survey, said the reluctance of lenders limits the range of products and rates available, discouraging take up.

He added: "It can also be hard for those who have used shared equity to move on because when you sell you have to pay back the money you borrowed from the local government and the proportional growth in equity. This also applies if you stop being a key worker."

"Some key workers don’t like the idea that if house prices continue to rise they are not benefiting from the full increase in the value making the next step up the property ladder another big jump."

Neil Johnson, policy manager at the Building Society Association said: "Building Societies support what the government is trying to do but it is important that ministers work with us to ensure that take-up is not hampered by excessive bureaucracy.

"Processing an application for a key worker shared equity mortgage takes one and a half times the length of a normal application. Competition has made margins in the mortgage industry very tight. Additional costs like these mean that the schemes are not worthwhile."

Gavin McGuire, a spokesman for the Office of the Deputy Prime Minister, the government department responsible for the schemes, said 10,000 public sector employees had bought a home using shared equity since April last year.

"The key worker living scheme is only available in London and the South East and some parts of eastern England. The scheme to help first-time buyers only started in April this year and we have some key lenders on board including Nationwide, HBOS and Yorkshire bank."

The survey of first-time buyers also revealed the sacrifices many young people are prepared to make to get on the property ladder. More than half are cutting back on going out to boost their savings while one in four are working an average of nine and a half hours overtime each week.

One in ten are planning to move to a cheaper part of the country to buy their first home while ten per cent will take on a lodger.

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