WARRINGTON is one of five councils to pilot a new scheme to help first time house buyers who can afford mortgage repayments but can’t raise a large deposit.
The scheme has been developed between the borough council and Sector Treasury Services, part of the Capita Group, over the last two years.
Considerable interest is being shown in the scheme by other councils across the country.
Increasing house prices and the size of deposit now needed to secure a home has meant that many people, and particularly younger people, cannot get a foot on the housing ladder. The average age of a first time buyer in the UK is now 37.
The initiative will essentially see local authorities “topping up” the deposits of working people, to bridge the gap 
between the cost of a typical 75 per cent and 95 per cent loan offered by banks and other lenders.
Lloyds TSB today announced that it was the first high street bank to join what should eventually be a panel of lenders to offer mortgages under the scheme, through an extension of its “lend a hand” initiative.
Councils involved in the scheme will provide financial assistance to fund up to 20 per cent of a first time buyer’s mortgage, by lodging the funds with the lender.
But they will only incur actual costs if a loss is incurred by the mortgage lender further down the line.
Cllr Paul Campbell, (pictured) Warrington’s executive member for finance said: “There are so many benefits in the adoption of this exciting initiative. In assisting first time buyers in our borough to access a mortgage we can help local people get on the property ladder whilst contributing directly to the local economy as well.
“We are proud to pioneer this scheme in Warrington and hope that soon it will be commonplace across the whole country.”
Another 10 councils have been involved in talks and are considering joining the scheme – and more are expected to follow.
According to the Land Registry of England and Wales, in Warrington the average price of a house was £186 049 during the last quarter of last year..
A £5 million commitment to the initiative over five years was included in Warrington Borough Council’s recently agreed budget and more detailed plans will go before it’s executive board next month.
The scheme will be subject to regular review and after five years the full risk transfers to Lloyds TSB.
Council help for first time buyers
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Gary Skentelbery
Experienced journalist for more than 40 years. Managing Director of magazine publishing group with three in-house titles and on-line daily newspaper for Warrington. Experienced writer, photographer, PR consultant and media expert having written for local, regional and national newspapers. Specialties: PR, media, social networking, photographer, networking, advertising, sales, media crisis management. Chair of Warrington Healthwatch Director Warrington Chamber of Commerce Patron Tim Parry Johnathan Ball Foundation for Peace. Trustee Warrington Disability Partnership. Former Chairman of Warrington Town FC.
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I take it this is a loan and not a gift. And what do council tax payers get out of this?
So more taxpayer money propping up the banks. The bank gets all the benefit and the taxpayer gets all the risk.
Just another scam to benefit the banks and WBC no doubt have worked out a nice little ‘partnership’ earner. The banks need borrowers to make profit., in the current economic climate to get borrowers they will eventually have to drop the level of deposits and interest rates. If WBC were really that interested in helping the young people of Warrington they could have given a £5million commitment to the Connexions services for improving employment opportunities!
Crikey Sha, you are just so negative and cynical about everything. You must be a real bundle of fun to live with.
Sha – I see your being your normal happy little self!
Anyway talk about money and getting into modern times – Remember Labour having a go at the council for the ipods??? I hear that the Trade Union reps of WBC are using ipods now because they are efficient and they reduce costs. Well done WBC for thinking outside the box early to once again save us tax payers money.
So once again the Labour Liars Machine has failed us all. Just think as well it the union subs that have paid for them the same subs that bankrolled Nick Bent £4,000 GMB Union. Small world but I wouldn’t like to paint it.
I hope they’re not using iPods – they should be doing work, not listening to music.
as well as pads
Let me get this straight. The council incurs a cost if the lender makes a loss (i.e. the borrower defaults). So where exactly does the council tax payer make a gain? And how does the council propose to recoup the loss of interest the council tax payer will suffer through having tens or hundreds of thousands – even millions – of pounds lodged with lenders rather than in their own accounts?
I don’t think ripping people off is a ‘bag of laughs’!
And I see you are being your normal muddled little self!…..”ipods???”
It’s getting very confusing with two lots of chats going on at the same time on many currennt local issues ie some on the forum and some with other people on the news pages and all saying different/similar thing should life be so complicated 🙂 Anway for this new topic on this bit INKY I AGREE WITH YOU !! and try as I might I can’t get my head round this one at all ie who loans it, where it actually comes from, how and when it may be paid back over the 25+ period of the mortgage etc. Maybe someone will explain tomorrow as I’m sure it must make sense somehow.
If you look on the Councils “Forward Plan” for decision making, you’ll see that the Executive Board won’t make a final decision on this scheme until the 18 April. only reason it’s making news now is that it was a one line item in the Councils capital programme, and Lloyds bank went public yesterday. (incidentally TSB is now part of Lloyds and TSB was originally set up by Birmingham City Council)
from what I’ve listen to about this (and there was a good debate on Toney Livesey on Radio 5 last night on this topic) the Council will borrow £5m to fund the scheme, but as a council they have access to low interest rate loans. They then invest the money with Lloyds (and make a small profit on this). Lloyds then take this as an underwriting of up to 20% on a first time buyer mortgage. The whole mortgage is with Lloyds, only risk is if a buyer defaults on the mortgage (nationally there is a 0.3% default rate) then the Council bears the first 20%of any loss. Of course even when a mortgage default it would be rare for the whole first 20% to be lost in the value of the property.
And then after 5 years the entire risk reverts to Lloyds anyway.
Overall it sounds like a great scheme, with minimal risk, to help first time buyers get a property in Warrington
My point exactly!! How can this be of any benefit to the vast majority of council tax payers?
I’m happy with it – the kids may have a chance to get a house now – well done WBC
If the coucil has, or can borrow, a spare £5 million then surely they can get a better return on it than by being tied to investing it with just one provider. And I also have a sneaking suspicion that the default rate amongst first time buyer who cannot afford to buy a house without a 20% helping hand will be quite a bit higher than the overall national average!
More people owning homes in Warrington, more community charge the WBC gains.