Ipswich: Council bosses aim to help first-time buyers get a foot on the housing ladder
- Credit: Archant
First-time buyers struggling to get a foot on the housing ladder will be given a leg up under a new initiative aimed at breathing life into the town’s housing market.
Ipswich Borough Council hopes to roll out its Local Authority Mortgage Scheme by the end of the summer, in a bid to help those unable to afford a deposit.
The idea was inspired by the Government’s Help to Buy scheme.
Working with Ipswich Building Society, the council will back first-time buyers to help them secure a mortgage with a deposit of just 5% – rather than the 20 to 25% usually required by lenders.
The council, which will act as guarantor underwriting 20% of the loan, will only open the scheme to applicants with a strong connection to the town who are looking to buy a property worth £155,000 or less.
Borough council leader David Ellesmere, pictured, said the aim was to help “Ipswich people buy Ipswich homes”.
“The reason why banks and mortgage lenders are requiring such large deposits is because they are worried about people defaulting,” said Mr Ellesmere.
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“It is these large deposits which are really pricing people out of the housing market.
“We are effectively providing a guarantee for the deposit so people will only have to find a 5% deposit.”
Mr Ellesmere was quick to stress the scheme should not come with a cost to the council unless house buyers default on their mortgage repayments.
But he said: “Mortgage lenders are very rigorous these days so we expect the default rate to be very small.
“It shouldn’t cost the council anything.
“We know people want to own their own homes. This is about giving Ipswich people the chance to buy homes in the town.”
He said the scheme was only for first-time buyers who have lived in the borough for five years.
“It is Ipswich borough taxpayers backing this scheme, so we want it to be available to those people living in the boundaries,” said Mr Ellesmere.
“For somebody trying to buy a house worth £155,000, they would currently need a deposit of around £30,000. For people renting it is virtually impossible to save that amount of money.
“The Government are planning their own scheme but the difference is we are ready to go, they aren’t.”
Estate agents in Ipswich today welcomed the plans.
Gemma Cattermole, branch partner at Connells, Ipswich, said: “This scheme would definitely be positive. It’s trying to save money for a deposit while renting that is so difficult for first-time buyers.
“The market is buoyant anyway at the moment and first-time buyers are coming through without these schemes. But if there are other opportunities to bring more people into the market place, that is really good.”
James Girling, director of Colin Girling & Company Ltd and PR representative for the Suffolk branch of the National Association of Estate Agents, added: “This will help first-time buyers.
“Since the beginning of May the market has been picking up and we have had more first-time buyers. There is a realisation that these schemes are out there and they know they can afford it more now so many people are realising it is cheaper to buy than rent.”
Charlie Wright, partner at Fenn Wright, said: “This will encourage people to get on the property ladder and gives them an opportunity to kick-start the market.
“The government scheme for first time buyers only helps with new builds but there is nothing for other homes sales. This scheme means any property you buy gets the market moving so we can start forming fairly decent chains. I am pleased it is going to be here in Ipswich.”