Councils to help first-time buyers

Handing over of keys

Lloyds TSB is teaming up with local councils to help first-time buyers get a foot on the property ladder.

In a scheme being trialed by five councils, the lender will offer more competitive mortgage rates to first-time buyers when councils deposit 20% of the property value in one of its savings accounts. The buyer then only has to stump up 5% deposit.

The council will be liable if the buyer defaults but it will receive a good rate on its savings, says the bank, although the exact details of what they will earn are yet to be confirmed.

The Local Lend a Hand mortgage is an extension of the Lend a Hand product already offered by the bank in which parents provide the 20% in savings.

The councils trialing the scheme are Warrington, Northumberland, East Lothian, Blackpool and Newcastle-under-Lyme.

According to reports, another 10 councils are waiting to join the scheme.

Stephen Noakes, commercial director of mortgages at Lloyds TSB, says: "We know that a lot of young people turn to the Bank of Mum and Dad to get their foot on the ladder, but that's not a solution for everyone.

"By developing Local Lend a Hand and working with local authorities across the UK, we're broadening the prospect of home ownership to even more first-time buyers."

Noakes says helping people to buy their first home is crucial in achieving and maintaining a sustainable housing market.

He adds: "With Local Lend a Hand, we're taking our existing Lend a Hand product to another level and addressing the real challenges first-time buyers face."

Your Comments

The real challenge facing FTBs is that house prices are still hugely inflated. If this is such a good scheme, why doesn't Lloyds put up the 20 per cent deposit? Perhaps the risk isn't commercially viable when there is such downward pressure on house prices, so the risk is being transferred not to councils per se, but to council taxpayers.
This, at a time of council cutbacks, is a shocking misuse of public funds.
FTBs would be better helped by allowing the housing market to find its true, 'sustainable' - to coin a word used by Stephen Noakes - level.