It was a very busy day for Delegated Decision reports yesterday (Monday 11th March). This in from the council, in their own words. Ed
An Isle of Wight Council initiative to help residents get a foot onto the property ladder is set to get the go-ahead.
A delegated decision report published today recommends the council goes ahead and establishes a £1m First Time Buyer Fund to bring home ownership into the reach of dozens of Islanders.
Kick start the housing market
It is anticipated that by helping residents into home ownership, the scheme will also help kick start the housing market and provide a wider boost to the local economy. A further benefit is that a revitalised property market will also free up rented homes in the social and private sectors for those most in need.
The First Time Buyer scheme will help Island residents take initial steps onto the housing ladder by helping to bridge the gap between the deposit that home-seeking residents are able to raise and that required by banks and building societies to approve a mortgage. It does this by lodging £1 million with a high street lender to act as a guarantee enabling mortgages to be granted to potential buyers who are unable to raise the size of deposit often required.
5% deposits
It is anticipated that deposits as low as five percent would be enough to secure a mortgage to those benefitting from the scheme. Typically would-be home owners are currently required to find deposits of up to 30 per cent, which in many cases is prohibitive.
The council will receive interest on its surety and after five years will see it returned, less any money that has been used through acting as guarantee to any mortgage defaulters.
The delegated decision report (embedded below for your convenience) states: “By seeking to address this significant barrier to home ownership, the scheme will not only allow a greater number of Island residents to own their own home, but will also free up social and private sector rented housing for other families on the Island who are not yet in a position to secure home ownership.
Hutchinson: “Scheme could potentially make a real difference”
Councillor Stuart Hutchinson, cabinet member responsible for housing, said: “Therefore, it is considered that the scheme could potentially make a real difference and have significant knock-on benefits for the Island’s housing market and the local economy as a whole.
“The scheme does not promote reckless lending or provide un-affordable mortgages: it simply reduces the value of deposit currently required. Safeguards are put in place to protect the council’s interests and minimise the risks of defaulting by ensuring that mortgages are only granted to those potential homeowners who are clearly able to meet the monthly payments.”
Further details of the scheme, which is already successfully operated by other councils in the UK are available in the delegated decision report which is available via the following link
Image: © Tax Brackets
