A new local authority mortgage scheme that assists first-time buyers will not be available in Angus.
Councillors have decided not to implement the scheme that is intended to benefit people who have fallen victim to the financial crisis, giving them a help to home ownership.
The scheme provides help to first-time buyers who can afford the regular mortgage payments on a home but are not able to provide the initial deposit necessary to purchase a house.
If potential buyers meet certain criteria, a participating local authority then agrees to provide a guarantee for up to 20% of the purchase price of the property.
The deal allows the potential buyer to get a 95% mortgage on similar terms to a 75% mortgage because the interest rate charged is more favourable than would normally be available to borrowers with small deposits.
Angus Council has decided not to back the scheme and to give priority to other housing commitments and initiatives meantime. But the door has been left open to reconsider the scheme at a future date.
The scheme was established not only to help would-be home owners suffering as a result of the economic crisis but also to assist the construction industry during the downturn.
Colin McMahon, Angus Council’s director of corporate services said people applying for help under the scheme, which has financial implications for Angus Council, did not necessarily have to live in the county. Assistance to such incomers would not help reduce the authority’s own housing waiting list.
Mr McMahon said: “Applications can come from anywhere in the UK, meaning first time buyers outwith the Angus area can apply for the scheme for example a resident in Dundee looking to move to Angus, and therefore not helping the council’s housing waiting list.”
Angus struggles to meet the demand for affordable housing and the council is involved in a number of schemes to try and meet the need.
The Local Authority Mortgage Scheme (LAMS) is developed by Treasury management advisors in conjunction with a number of Scottish and English local authorities to assist first-time house buyers.
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Mr McMahon said: “It is seen as a way to use the extensive powers available to local authorities under housing acts to help people on to the home-ownership ladder that have fallen victim to the financial crisis trigger of 2008 and consequent constrained mortgage lending.
“It is believed such a scheme would alleviate some demand pressure on social housing, assist in the recovery of the wider housing market and indirectly assist in the recovery of the construction sector of the economy.”
He said the council should not support the scheme at this time.
“The key question is whether this particular scheme would be a better fit with our housing policy objectives than the other initiatives and investments being pursued that is, does the council wish to invest the time, money and energy required to implement an Angus version of LAMS or should it continue to pursue existing strategies.
“The scheme could help reduce the demand on housing waiting lists and assist in the wider recovery of the housing market.
“However the number of housing waiting list applicants within Angus is relatively high in comparison to the housing stock available and . . . the impact of the scheme on reducing waiting lists would be small.
“If all mortgages approved were for properties with a value of around £125,000, with a council guarantee of £1 million this would only be sufficient to support around 40 mortgages.”
Council officers would monitor the progress of the scheme within other councils.
He said: “Reconsideration of the council’s participation in the scheme would come at an appropriate future point, probably once some of the pilot projects are well under way and the operation of the scheme in practice has been assessed.”
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