Many first-time buyers have been priced out of the property market

Mortgage bank Abbey said it would not be taking part in a trial of the state sponsored shared ownership scheme because it was not cost-effective.

Under the HomeBuy scheme, first-time buyers would buy a percentage of a home, with the rest held by lenders.

The scheme is designed to turn 100,000 more people into homeowners by 2010.

Abbey said the limited size of the trial and the required investment in systems development meant that it was not yet financially viable for it to be involved in the scheme.

Also, the bank said that it believe the scheme was limited by the small number of families it would assist and called for more to be done to help first-time buyers.

"We await the outcome of the trial with interest and maintain a watching brief," said Abbey.

Abbey's withdrawal from the schemes leave just four lenders who are willing to offer the loans.

Choice of three

The government announced on Thursday the three main categories of the HomeBuy scheme. These are: Social HomeBuy, Open Market HomeBuy and New Build HomeBuy.

Under the "Social HomeBuy" scheme social tenants will be able to buy a share in the property they currently live in. People can buy a minimum of 25% of a home, with the rest of the equity held by a housing provider.

"Social HomeBuy will provide social tenants who do not have, or cannot afford the Right to Buy or the Right to Acquire, with an opportunity to buy a stake in their homes," said housing minister Baroness Andrews.

With the "New Build HomeBuy" scheme people will be able to buy a share in a newly built property. There will be a minimum purchase of 25% of the newly-built home. The mortgage lender will hold the remainder of the equity.

The third option, "Open Market HomeBuy", will enable people in London and the South East to buy a property on the open market with the help of an equity loan.

Under this scheme the buyer will be expected to purchase about 75% of a home on the open market. The housing provider will then lend them the remaining 25%.

The government hopes to have all three schemes up and running by April 2006.