Braintree council described as a “pioneer” after launching a scheme to help first-time home buyers
A council has been hailed as a “pioneer” after becoming the first local authority in Essex to offer financial help for house buyers struggling to save up a mortgage deposit.
Under the new Local Lend a Hand scheme, launched by Braintree District Council yesterday, the authority has agreed to underwrite 20% of the house price up to £50,000 for first-time buyers living in the area.
The initiative has been made possible through a partnership between Braintree Council and Essex County Council, which have each set aside £1million for the project. Lloyds Bank is also involved in the scheme, which will be available from its Braintree, Halstead and Witham branches.
Braintree is the first authority to partner with the county council in this way since it announced last year it had set aside £7m to be matched funded by district or borough councils for Local Authority Mortgage Schemes (LAMS).
And yesterday Essex County Council leader David Finch praised the authority for taking the step.
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He said: “Braintree District Council has a long-standing reputation as a pioneer and as an organisation that finds new ways of doing things.
“We were engaged with a number of authorities last year but Braintree has had the will to persist with it.”
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According to Braintree Council, first-time buyers often say that raising a deposit is the biggest challenge they face when looking to take their first steps onto the property ladder. The scheme is intended to help buyers who can afford a mortgage, but have not previously been able to build up the necessary deposit.
Subject to Lloyds Bank’s usual lending criteria, borrowers are able to select any existing property in the area covered by Braintree Council up to a maximum loan of £250,000. First-time buyers will put down a minimum 5% of the property price, and the councils will provide a cash backed indemnity of up to 20% as additional security. The local authorities then earn interest on this amount.
Cabinet member for performance and efficiency at Braintree Council, David Bebb, said, the he expected between 60 and 80 first-time home buyers to benefit from the scheme.
He said: “We have looked at examples of similar schemes around the country and evaluated the risks, and are proud to be trail-blazers for this scheme in Essex.
“The scheme will especially help first-timer buyers from less well-of backgrounds who are not able to borrow money from their parents. It will also help stimulate the local housing market and benefit the wider local economy.”
Mortgages director at Lloyds Bank, Marc Page, added: “With the launch of Local Lend a Hand in Braintree we’re making the housing market more accessible to more people. Helping people to buy their first home is crucial in achieving and maintaining a sustainable housing market. Local Lend a Hand addresses some of the real problems that prospective buyers in Braintree might face.”