Concerns raised that council mortgage scheme for first-time buyers is not helping right people (From Basingstoke Gazette)
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Concerns raised that council mortgage scheme for first-time buyers is not helping right people
7:30am Tuesday 27th August 2013 in News
QUESTIONS have been raised about a council scheme to help first-time buyers to get on to the housing ladder amid concerns that it is not helping the right people.
Basingstoke and Deane Borough Council is looking to release a further £1million for its Local Authority Mortgage Support Scheme.
The scheme is for first-time buyers who can afford mortgage repayments but cannot stump up the 25 per cent deposit required by banks.
The council guarantees 20 per cent of a buyer’s deposit, meaning he, she or they only have to pay the remaining five per cent. The scheme is funded by a £1m deposit of council cash banked with mortgage lender Lloyds TSB. The council will earn 1.7 per cent interest on the payment. Since January, the first £1m has been used, covering 27 mortgage applications.
The borough’s economic prosperity and performance committee has now considered whether to recommend making another £1m deposit to further the project.
Councillor John Izett, Cabinet member for property, finance and commissioning said: “We had a very good take-up from a lot of first-time buyers, and reached a point where the first £1m we allocated in indemnity and investment with Lloyds TSB has been used up.
“There are other first-time buyers keen to access this scheme, and I think there is a clear desire to proceed with realising the second tranche of £1m.”
But opposition Liberal Democrat, Labour, and Independent councillors on the 12-strong committee questioned whether the scheme is helping the neediest residents after it emerged that some homes purchased by buyers cost more than £200,000.
The most expensive property bought using the scheme was £250,000, the cheapest £119,000 and the average was £185,000. Eastrop Liberal Democrat councillor Gavin James was concerned people able to afford a home were using the scheme to buy a better place.
“The scheme was never to embellish the property that people can afford,” he said. “I think the scheme has a worrying look about it. My concern is still we have no way of knowing that these people we have helped could have found their own way into the housing market.”
However, Conservative Hatch Warren and Beggarwood councillor Rebecca Bean dismissed a suggestion to lower the £238,000 mortgage cap needed for a £250,000 house.
“I am picking up a sense that £250,000 is a lot for a first-time buyer to fork out,” she said.
“To put that into context, I would like to buy a house. I have two children and a third on the way and am looking for a four-bedroom house. £250,000 for a four-bedroom house does not get you that far.”
The council’s Cabinet will decide whether to extend the scheme in September.
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