£1m Rugby taxpayer-funded scheme helped 22 first-time buyers in a year

Cllr Leigh Hunt believes the scheme has been a great success
Cllr Leigh Hunt believes the scheme has been a great success

A £1 million council-backed scheme to help first-time buyers in Rugby get on the property ladder helped 22 buyers in its first year.

Rugby Borough Council worked with Lloyds TSB to assist buyers in raising a deposit.

The council set aside £1 million for the ‘Local Lend A Hand’ scheme, which offered mortgage deals requiring a deposit of five per cent, compared to the ten per cent demanded by most mortgage lenders.

Lloyds TSB, now Lloyds Bank, recently suspended Local Lend a Hand in the wake of the Government’s decision to expand the national Help to Buy scheme from January. And on the first anniversary of its launch, the council has revealed it has helped 22 first-time buyers in the borough on to the property ladder. The figures also showed the average age of buyers was 29-years-old.

Cllr Leigh Hunt believes Local Lend a Hand was a successful forerunner to the Government’s Help to Buy scheme, which was launched in April. She said: “Local Lend a Hand was a first in Rugby, helping first-time buyers raise a deposit and gain a step on the property ladder.

“Alongside other initiatives, such as building new social housing and investing in our sheltered accommodation, the council has shown its determination to provide more housing options to meet the needs of our communities.”

Under the scheme, borrowers selected a property in Rugby borough up to a maximum loan of £120,000. First-time buyers then put down a minimum five per cent of the property price, with the council providing a cash-backed indemnity of up to 20 per cent as additional security. The council earns interest on the amount.

The first-time buyer owns the property in its entirety, paying a fixed rate mortgage at a lower rate of interest than normal for a five per cent deposit.

Under the scheme, borrowers selected a property in Rugby borough up to a maximum loan of £120,000. First-time buyers then put down a minimum five per cent of the property price, with the council providing a cash-backed indemnity of up to 20 per cent as additional security. The council earned interest on the amount.

The first-time buyer owns the property in its entirety, paying a fixed rate mortgage at a lower rate of interest than normal for a five per cent deposit.