Council homes scheme to aid first-time buyers under fire from Tories
A SCHEME to give first-time buyers help to get a mortgage, costing taxpayers £1 million, will be launched by Derby City Council today.
The authority's Tory opposition party says the cash could be better spent on funding beds for the homeless.
But the council's Labour leadership says the claims are "disingenuous" as the cash they are using could not be spent on public services.
The council says it will use the money, which it would otherwise have invested in banks or building societies, to help between 35 and 40 first-time buyers.
It will mean applicants can get a mortgage with a minimum 5% deposit as the council will contribute another 20% of the property's value as security so the interest rate is lower. Most mortgage lenders would require at least a 10% deposit.
The mortgage lender in the scheme, Lloyds TSB, will then pay the council interest on its cash. Councillor Sarah Russell, the council's cabinet member for finance, said the "sensible investment" would "kick-start Derby's economy, giving fresh impetus to the local housing market and encourage growth".
And she said the money from Lloyds TSB would yield higher returns, from an interest rate of about 2.5%, than if the authority had made other investments.
Councillor Phil Ingall, shadow cabinet member for housing, claimed the money could and should have been spent to bolster the council's "housing-related support budget". This is being cut from £6,675,000 in this financial year to £3,675,000 for 2013-14, leading to the number of beds for the homeless which the council funds dropping from 556 to 179 by October.
He said: "They are going to put the homeless on the street but they want to help 40 people buy new homes – people that could pretty much afford a house anyway."
Asked to respond, Miss Russell said the money was being "deposited, not spent", so the claims were "disingenuous at best".
She said: "The council money comes from our internal cash balances and is an amount of money that we expect to get back at the end of the term.
"The cash does not constitute expenditure for which an alternative application could be considered as we expect to get the money back; therefore, the money could not be used to fund frontline services. As such, those comparisons are disingenuous at best."
Those that qualify for the mortgage scheme would have to be first-time buyers looking to purchase a non-new-build property worth £142,500 or less in Derby. The authority says eligibility would otherwise be governed by "market forces".
People interested in getting a mortgage through the scheme can go into Derby Lloyds TSB branches for more information. Applicants will be subject to the bank's normal assessment criteria.