There’s a glimmer of hope for first time buyers after five local councils announced they were pioneering a scheme to top up deposits for people who can’t afford hefty deposits.
Blackpool, East Lothian, Newcastle-under-Lyme, Northumberland and Warrington councils will put 20% of the cost of the property in an account with Lloyds TSB and the bank will require the buyer to lay down a 5% deposit. At no point will the buyer receive any of the council funds but they will benefit from a lower contractor mortgage rate.
Although the councils fun the risk of losing money if the buyer defaults, they will get a generous interest rate on the funds. Up to 300 first-time buyers are set to benefit from the first stage of this scheme in each of the 5 council areas. 10 other councils are also waiting to join the Local Lend a Hand scheme.
Lloyds TSB spokesman, Stephen Noakes, said that by working alongside local authorities, home ownership can become a reality to more first timers and this is essential if the UK is going to have a sustainable housing market.
Grant Shapps, the housing minister, welcomed the announcement saying he was delighted that banks and councils are stepping up efforts to help people purchase their first home.
However, not everybody shares that sentiment. Henry Pryor, an estate agent and property market commentator, said it wasn’t the job of local councils to prop up the housing market and they shouldn’t be risking council tax money when government austerity measures are squeezing their budgets.
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