A SCHEME that helps Malvern Hills residents get a foot on the property ladder is facing the axe.

Around 20 first-time buyers sign up to Do-It-Yourself Shared Ownership (DIYSO) schemes in the district every year.

Each buys half the property they want while Elgar Housing Association purchases the remainder. The association then rents its half back to the buyer, who can then gradually increase their share until they own the property.

However, Deputy Prime Minister John Prescott has announced that the Local Authority Social Housing Grant, which finances DIYSO, is to be scrapped in April.

Malvern Hills District Council, which has about £4.5 million available for the scheme, and Elgar Housing will both lobby the Government to retain it.

"DIYSO has been a major plank in our provision of affordable housing because it is particularly suitable for an area like the Malvern Hills," said Keith Parry, the council's head of housing. "It will be a major setback if we lose it.

"The problem is that the cost of private housing has risen so much that even traditional middle income earners of £16,000 to £18,000 a year can no longer afford the level of mortgage they need to have a chance of getting on the housing ladder.

"DIYSO gave them that chance, so it is very unfortunate for them and for Malvern as a whole that the system is now being taken away from us."

Mr Parry said that the withdrawal of the fund might not leave the district worse off financially, as it will be distributed through the regional arm of the Housing Coroporation, a quango that gives money to housing associations. However, it will mean the council has less control of how those funds are handed out, which could scupper DIYSO.

He warned that if nothing was done to address it, the shortage of affordable housing could damage the local economy.

"There is a real risk that people will leave their jobs and move away to cheaper areas," he said.

"That in turn can result in a shortage of labour for local companies and increase the risk that they too may move away."