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Council help for New Homeowners 2005-02-23

Posted by clype in Money, Scotland, Statistics.
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Desperate first-time buyers will be offered interest-free loans by their local council to help them on to the housing ladder, it emerged yesterday. East Lothian Council has become the first Scottish Local Authority to reach out and help new buyers with loans of up to 30 000 GBP, or 25 per cent of the house value. ‘The Financial Assistance to House Buyers” scheme is a response to a drastic shortage of affordable housing in East Lothian — the average price of a home in the area is 170 000 GBP — and a rising population. Those hoping to benefit will have to show they have lived in the area for a substantial period of time and are in real need of financial help. Those who have been on the council’s housing list, or who are living with parents, will be given priority. Applicants secure permission for a loan initially then, having been given the go-ahead, can apply for homes of a value of up to 125 000 GBP. They will then have to arrange a mortgage for the remaining 75 per cent of the house cost. Loans have to be repaid in full once the person leaves East Lothian. The scheme will be ‘rolled’ out as a ‘pilot project’ this autumn, at a cost of 300 000 GBP. Initially, ten to 15 individuals or families will benefit, but if it proves successful it will be expanded. The council’s housing convener, Mr.Willie Innes, said:

‘It’s not just particularly the shortage, it’s the cost of housing being built in the county.

‘It’s excluding people from entering the market.

‘We’re talking about successful people here, who would be expected to be able to afford a house and move on to the housing ladder. ‘But house prices have risen so sharply — the issue is that property developers are building for an Edinburgh market; they’re not addressing East Lothian’s housing problems’.

He said the loans were part of a ‘raft of measures’ to ‘tackle the issue’, including a two-year rent ‘freeze’ to encourage people to remain council tenants — and a 1 000 million GBP investment in building affordable housing over the next ten years. He said that East Lothian was a ‘victim of its own success’ with ‘large-scale’, ‘high-quality’ housing developments in Dunbar, Aberlady and Inveresk.

‘The pressures on the county are acute’, he said.

‘Many Local Authorities have a housing surplus, we don’t have that.

‘We’ve had a lot of people move in from Edinburgh — attracted by the lifestyle and environment — and this adds further pressure. But “The Scottish Executive” doesn’t reward a growing area as much as deprived ones’.

Further pressures in the form of the recently completed upgrade of the A1 road to Dunbar and an increase in the frequency of trains along the east-coast line make commuting even more viable. Mr.Bruce Black, the executive director of ‘Homes for Scotland’, which represents building companies, said:

‘Due to shortages in supply, the price of land for housing across the whole of Scotland has risen to such an extent that developers are simply unable to build the type of homes needed by first-time buyers. ‘We have been arguing for some time that the only way to impact house prices and address the problem of affordability is to release more land’.

Ms.Grainia Long, policy manager for ‘Shelter Scotland’, said the council’s approach highlighted a national problem.

‘For so many households, it’s impossible to afford even the lowest-cost housing.

‘East Lothian seems to be taking a practical approach to this issue, but it is on a small scale.

‘”The Scottish Executive” need to be taking the lead’.

A spokesman for ‘The Scottish Executive’ said:

‘We welcome East Lothian Council’s interest in the use of shared equity as a means of addressing affordable housing shortfalls and have supported their initiative with funding’.

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