£700m home loans for key workers

Tens of thousands of London-based nurses and teachers will be given the chance to buy their own homes tomorrow.

A scheme giving loans to help key workers get on the housing ladder is being expanded.

It comes as a new survey revealed a quarter of Britons have to save for up to six years before they can put down a deposit on a house - while thousands more never get the chance.

Now some £700 million will be put up by the Government to help up to 30,000 people in vital public sector posts move into a home of their own.

A typical purchaser could be a south London policeman earning £25,000 who cannot afford a family property in easy travelling range of his station. Under the scheme he might borrow £30,000 or more, interest-free.

The cash would only be repaid if he left his job or sold the house - giving a powerful incentive for experienced staff to stay in their professions.

Details will be unveiled by Deputy Prime Minister John Prescott who

hopes the new fund will help recruit staff to the capital's schools, hospitals and police stations.

Equally importantly, the scheme is designed to cut down turnover of public sector staff in the capital caused by experienced, fully trained personnel leaving to find better paid jobs in industry or simply moving to cheaper housing areas outside the M25.

It builds on a fund worth £230million launched three years ago which has helped around 9,000 public sector employees onto the housing ladder.

The new scheme is set to be more generous to reflect the soaring property market. Typical loans under the old scheme were £30,000 but they could rise to £50,000 in some cases.

In a weekend interview, John Prescott said he believed building new houses on a massive scale in the South-East could slow down the price boom.

The Deputy Prime Minister signalled his backing for recommendations by economist Kate Barker for up to two million new homes to be built over the next decade. "We do not want a situation in the South-East that forces people to move out of that area," he said.

"We need a more moderate increase in prices."

Meanwhile, the First-Time Buyers Report, for the Bradford and Bingley building society, said 50 per cent were forced to sit back and watch prices rise because they were stuck paying off debts and could not get enough cash together for a deposit.

The report other findings include:

David Bitner, head of product operations at The MarketPlace, said: "The booming property market which has forced up prices and the 'buy now, pay later' culture has left many consumers with more debt than savings.

"That means many first-time buyers have no choice but to wait to get on to the property ladder."