A local authority has launched a £12m scheme to revive the housing market by giving first-time buyers an affordable way to take out mortgages of up to £350,000. The scheme, drafted by Kent County Council’s (KCC) legal team, is designed to help hundreds of first-time buyers purchase homes with a deposit of 5%, half that required by most mortgage lenders.
The Kent Local Authority Mortgage Scheme is based on a partnership between KCC, borough and district councils across Kent, and mortgage lender Lloyds TSB. Borrowers may select any property within the local area up to a maximum loan size of £350,000, subject to usual lending criteria.
Buyers put down a 5% deposit of the property price and KCC and the appropriate borough or district council then provide a cash-backed indemnity of up to 20% of the price as additional security.
Catherine Lloyd, property team leader, governance and law at KCC, said: ‘This is an innovative scheme, a genuine first, and we are optimistic that it will light the blue touch paper for the revival of the housing market and give a much-needed boost to conveyancing solicitors. We plan to roll out the scheme, drafted from scratch by KCC legal services, throughout Kent. Other counties will be using the Kent format to help them kick-start their local housing markets.’
The scheme is enabled by section 1 of the Localism Act 2011, which gives local authorities wide-ranging powers to do anything that is of benefit to the local community. KCC has set aside £12m to match investments in the scheme of up to £1m from individual boroughs and councils. Should a property be repossessed, Lloyds TSB can call on local authority funds to make up any shortfall when it is sold.