Council’s ‘helping hand’ for first-time buyers
- Credit: Archant
Authority launches £1m mortgage scheme to help people a step onto the housing ladder.
FIRST-time buyers in North Devon are being given a step up onto the housing ladder thanks to a £1million investment by North Devon Council.
The authority has joined forces with Lloyds TSB to launch a ‘Lend a Hand’ mortgage scheme to help local people buy their first home with a deposit of just five per cent.
The council estimates it will be able to help around 30 first-time buyers by providing a cash-backed indemnity of up to 20 per cent to make up a 25 per cent deposit.
The council is the first local authority in Devon and Cornwall to take part in the scheme, already been successfully launched by 28 other local authorities around the country. If successful, a further £1m could be made available at a later date.
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It has been welcomed by many, including North Devon MP Nick Harvey, who said the scheme would help ‘bridge the gap’ and make the housing market more accessible to people in North Devon.
But it has been criticised by others, including one of the council’s own members, who claims the authority is ‘gambling’ with taxpayers’ money.
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Conservative councillor David Luggar called it a ‘shocking waste’ of public money.
He said: “North Devon Council just cannot take on any more risks on potty schemes while the budget they have is being cut and council jobs are being lost.
“It’s not the job of a council to use taxpayers’ money to subsidise the housing market, so distorting what is already a heavily distorted market.”
“People in real housing need probably won’t be able to afford to qualify for a mortgage. North Devon has over 20 families in extreme need and if £1million is available, surely it should be directed to help those people.
“I’m not surprised other councils in the South West aren’t getting on board this long running, low take up scheme.”
The council said the authority would only lose its money if, in the event of a repossession, the value of the house dropped by 25 per cent.
“The interest earned from the scheme would cover this small risk should it happen - not taxpayers’ money,” said a spokesperson.
“We are not directly giving cash away to first time-buyers. The £1m is held in a separate bank account at Lloyds as a form of insurance should things go wrong.
“There have been no repossessions across the scheme nationally since it began.”
Executive Member for Housing, Cllr Faye Webber, said: “First-time buyers often say that raising a deposit is the biggest challenge they face when looking to take their first steps onto the property ladder.
“I’m really pleased to see the scheme officially launched today and hope that it makes a difference to local people who have been struggling to raise the funds for a deposit to buy their own home.”
Stephen Noakes, mortgages director at Lloyds TSB added: “With the launch of Local Lend a Hand in North Devon, we’re making the housing market more accessible to more people.
“We know that many young people turn to the ‘Bank of Mum and Dad’ to get their foot on the ladder, but that is not a solution for everyone.
“Helping people to buy their first home is crucial in achieving and maintaining a sustainable housing market. Local Lend a Hand addresses some of the real problems that prospective buyers in North Devon might face.”
Anyone interested in the local scheme should visit their local branch of Lloyds TSB for more information.