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New scheme to help first time buyers on the cards
FIRST-time home-buyers could receive a big leg up on to the housing ladder thanks to a new scheme being planned by Basingstoke and Deane Borough Council.
Cabinet chiefs have backed a plan that will mean selected first-time buyers will only have to find a five per cent deposit to obtain a mortgage.
By placing £1million in a bank, the borough council will guarantee the deposit of up to 20 per cent of the house price, when the standard deposit is 25 per cent. It is estimated the scheme will help up to 56 first-time buyers, although exactly who will qualify has yet to be decided. But the properties will have to be in the borough.
The scheme – known as the Local Authority Lending Scheme – is already established and other councils are taking part. The borough’s 60-strong council still need to give it the go-ahead on October 11.
If it gets the green light, the local authority will team up with high-street bank Lloyds TSB, which will administer the scheme.
The proposal follows a borough-commissioned report which found that 83 per cent of potential first-time buyers in Basingstoke and Deane would struggle to get a mortgage.
Councillors on the economic prosperity and performance overview and scrutiny committee, as well as the borough council’s decision-making Cabinet, have welcomed the scheme.
Committee chairman Councillor Rebecca Bean, who is 23, said the scheme will help young people struggling to buy.
“For someone like me, to save 25 per cent to a buy a house is nearly impossible,” said Cllr Bean, pictured. “So many young people are staying at home for longer and longer with their parents. So this is helping young people like myself.”
But Cllr Ian Tilbury said endorsing the scheme was just “reinflating the balloon” that caused the 2008 credit-crunch. He argued that the mortgage help scheme would encourage buyers to stretch themselves financially, increasing the likely number of people defaulting.
“We are doing the right thing by trying to help them,” he said. “But we are not helping them by encouraging them to take on a very large deposit.”
Cabinet suggested that mortgages eligible for the scheme are capped at £238,000. Full council will need to agree to moving £1m of taxpayer cash into a Lloyds TSB account for a five-year period.
Cllr Rob Golding, Cabinet member for housing and regeneration, said: “In the current housing market, with high deposits needed by mortgage lenders, people can struggle to find the money to buy their first home even if they can afford the monthly repayments. We want to do something to help residents, especially young people, to take their first step on to the housing ladder.”