Scheme to help first-time buyers in Bristol
FIRST-time buyers looking for a hand up on to the property ladder are to be helped by a unique scheme launched by the city council and a major high street bank.
The gap between earnings and property prices in Bristol is one of the largest in the country – and getting wider by the month as prices continue to rise, despite the economic conditions.
Potential home-buyers now need to be earning at least £45,000 a year to be able to afford a mortgage for an average-priced Bristol home, which costs £210,133.
The average salary for workers in the city currently stands at just over £21,000 and the widening affordability gap means that the average age of a first-time buyer in the city currently stands at 37.
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The financial crisis has meant that banks and building societies are asking for deposits of at least ten per cent, leaving most potential buyers in need of a deposit of at least £20,000 to stand any chance of owning a home.
With fewer deals going through at the bottom end of the housing ladder the whole property market has struggled to recover in recent years.
The new scheme, officially launched yesterday, has seen the city council join forces with Lloyds TSB. The council has agreed to act as a guarantor for a 20 per cent slice of mortgages up to £142,500, which means that people signed up to the scheme will only have to find a deposit of five per cent and Lloyds will be able to offer mortgages at highly competitive rates.
Although the maximum mortgage value covered by the scheme is below the city's average house price it does cover many properties currently on the market, including one-bedroomed flats and even two-bedroomed houses in St George for sale at around £140,000. Demand is expected to be high although the scheme is likely to be run for at least two years.
The council has set aside a pot of £2 million for the scheme but there are a number of conditions.
People taking part in the scheme have to be first-time buyers and the house has to be within the city council's boundaries.
Similar schemes are being set up in other parts of the country but the city council is one of the first local authorities to get involved in lending directly to home-owners.
Anthony Negus, the cabinet councillor in charge of housing, property services and regeneration, said: "We know that only a small proportion of the city's younger households, just over a third, can afford to buy their own home now.
"This scheme will make a major difference to the lives of a number of young people across the city and help boost the sluggish local housing market. We know that times are tough for many people at the moment and are doing all that we can to find ways in which we can support those who need help."
Although the scheme was only launched yesterday, Lloyds has already had more than 40 enquiries from interested people.
Lloyds TSB commercial director Steven Noakes said: "With the launch of Local Lend a Hand scheme in Bristol, 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."
Cecilie Booth, director at scheme partners Sector Treasury Services, said the scheme was intended to "bridge the gap" for potential first-time buyers who can afford mortgage repayments on a typical first home but do not have a sufficient deposit to obtain a mortgage in the open market.
The city council has also got involved in a scheme which involves taking over derelict properties and renovating them so they can be used for housing.