News / SIC mortgage scheme comes closer
SHETLAND Islands Council hopes to set up Scotland’s first local authority mortgage scheme to help first time buyers climb onto the property ladder.
On Thursday the SIC’s services committee gave the go ahead for plans to develop a pilot “shared equity” scheme buying shares in affordable housing for people in Lerwick and Brae.
The council is looking to invest around £250,000 in a dozen properties, purchasing an average 20 per cent share in each home. If successful the scheme could be extended further, if money is available.
First time buyers would be expected to stump up a deposit and pay the full mortgage, as well as any extra costs such as legal fees. The council would get its money back when the house was sold.
The council hopes the scheme will help reduce Shetland’s overstretched council house waiting list, while stimulating the local property market and helping it meets its target to increase the number of houses in Shetland to 12,000 by 2025.
At the moment the authority is holding back from setting up a full mortgage scheme similar to one it operated during the 1970s when mortgages were much harder to come by after finance staff advised it would not be wise.
However Shetland South member Rick Nickerson persuaded the committee to keep the door open on the possibility of setting up a full mortgage scheme in the future.
“I think there is going to be a real crunch in the private sector. We have some major projects on the horizon, particularly with Total, and already they are looking at private sector rental which will push up rents,” he warned.
If the shared equity scheme goes ahead, the pilot will include properties the council plans to build in Hoofields, Lerwick, and at Gallowburn, in Brae.
Similar schemes operate in England and Wales, but this will be the first time one has been set up in Scotland and it will have to be approved by Scottish ministers before it can proceed.
SIC head of housing Chris Medley stressed that the council would create incentives for people to buy out their share and would receive the market value of their share when the property was sold.
To avoid the scheme being used for speculation, people who already own homes will be excluded and the value of properties will be capped, possibly at around £100,000.
Mr Medley said officers would be meeting next week to discuss releasing council-owned land for building houses under the scheme in the hope of keeping the cost of house sites to a minimum.
Councillors suggested it would be good to roll the scheme out to rural areas, Shetland North member Alastair Cooper saying it would be a way of expanding existing housing schemes which already had basic infrastructure in place.
However a request by North Isles member Robert Henderson to offer grants of up to £60,000 to people to buy a house anywhere in Shetland was dismissed as unaffordable.
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