SCHEME OFFERS HELP TO STOCKPORT FIRST-TIME BUYERS

Stockport Council is drawing up plans to help first-time buyers and give the housing market a boost with a proposed new mortgage scheme.

The Council is currently considering proposals for the introduction of a ‘Local Authority Mortgage Scheme’ (LAMS) to assist first-time buyers to get onto the property ladder.

The report seeking approval for the introduction of a LAMS scheme is currently being considered by two scrutiny committees, with a final decision expected by the Council’s Executive on 2^nd April.

The Leader of Stockport Council, Councillor Sue Derbyshire, said:
“This is a pioneering scheme which is being proposed for Stockport. It will give first-time buyers a helping hand onto the property ladder and give a significant boost to the local housing market.

“The Council is looking to invest £3million into this scheme, which we expect will assist over 100 first-time buyers to get onto the property ladder. This would create a chain effect which is likely to facilitate the sale of another 300-360 properties across the borough, boosting the local economy.”  

Leader of the Labour Group, Councillor Andy Verdeille, commented on the proposal to help first-time buyers:
“We have a housing crisis. There aren’t enough affordable homes being built in Stockport and the price of a typical home for a first-time buyer is out of the reach of many people. The Labour Group proposed a’ Local Authority Mortgage Scheme’ in January and I am pleased that the Council has come forward with a proposal that we can look at and hopefully implement quickly.”

The Council has been considering ways to boost the housing market while helping first-time buyers. The LAMS scheme was developed by ‘Sector’, and has now been introduced by a wide range of local authorities, with an increasing number of lenders taking part.

The scheme works through lenders who undertake the normal credit reference checks, but provide a 95% mortgage (5% deposit from the purchaser), based on lending rates they would normally offer on a 75% mortgage.

The 20% difference is ‘guaranteed’ by the Council for five years through a mortgage indemnity provided via a large scale deposit with the lender. The lender can only call down this indemnity if the property is repossessed and the subsequent sale does not realise the outstanding capital owed to the lender.

In return, the Council receives a preferential interest rate on the large scale deposit. And after the five years, the risk reverts wholly to the lender.

Key points of the current proposals for the mortgage scheme are as follows:

• Available for first-time buyers only
• Applicants will be assessed by participating lenders
• Properties must be within Stockport
• Maximum property value will be £150,000
• Not available for ‘right to buy’ or ‘buy to let’ applicants

Details of the lenders participating in the Stockport scheme will be publicised after the report has been considered by the Council’s Executive.