The Isle of Wight Council is set to establish a £1 million first time buyer fund to help Island residents take their first step onto the property ladder and provide a much-needed boost to the local housing economy.
Through a Local Authority Mortgage Scheme – already successfully underway elsewhere in the country – the Isle of Wight Council would help would-be home owners bridge the gap between the mortgage deposit they are able to raise and that required to secure an agreed mortgage. It is proposed that a £1 million returnable surety would be lodged with a major high street bank or building society, which would then administer the scheme on the council’s behalf. Secure lower interest rates The initiative is aimed at those households who are able to afford monthly mortgage payments on a property to meet their needs, but are currently unable to raise the level of deposit required to secure a mortgage in the first place. It would also help them secure lower interest rates. It is hoped that as well as offering vital help to potential homeowners, the scheme would also send positive ripples throughout the wider economy and in the housing market – releasing rented stock for those families in need of somewhere to live. The initiative is part of a proposed £2.23 million capital investment in housing which will be considered by council on 27 March. It will also be complemented later this month by a cabinet member paper setting out additional measures to be included in a new housing strategy, such as how social housing stock can be used more effectively to support those in greatest need. Helping first time buyers Councillor Stuart Hutchinson, cabinet member for adult social care and housing, said: “A major obstacle preventing Island people buying their first home is that they can often struggle to raise the size of deposit required by lenders before they will agree a mortgage. “This new scheme will help first-time buyers overcome the hurdle of needing to save a very large deposit to put down on a property. With support from the First Time Buyer Fund, the deposit they will need to raise could be as low as five per cent – rather than a prohibitively higher figure which might otherwise be required. “A further advantage with this initiative is that it will be easier for them to afford the mortgage payments. This is because they will benefit from a lower interest rate than would normally be available to customers with a small deposit.” Dozens could be helped It is estimated that the scheme will initially help around 40 first-time buyers onto the housing ladder, although if successful the returned surety could be subsequently reinvested in support of additional home purchasers on the Island. Councillor Hutchinson added: “This fund will not only help potential homeowners – and consequently those seeking freed up private rented accommodation – but also the local economy. A stimulated housing market is good news for those looking to buy and sell, those involved in the home-buying and home-selling businesses and also those suppliers, trades and stores connected with home improvement. It is estimated that introducing one additional first-time buyer to the market typically frees up to five house sales in a chain.” Work to finalise details of the scheme is continuing and a report will be brought to Cabinet on 12 March to formally agree a way forward.
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