LIVERPOOL’S housing market could be reinvigorated by gilt-edged council loans.The city council is considering injecting cash into the bottom of the market to ease the “mortgage famine” caused by the credit crunch.Concerns over falling house prices and a sales slump prompted senior councillors to ask for a feasibility study on offering the Town Hall mortgages.The scheme could help victims of the crunch, especially first-time buyers and low-income families, get onto the property ladder.
Mortgages are becoming increasingly hard to come by as banks are being more choosey about who they lend to. The rising cost of food and energy bills, along with the economic downturn, is forcing more borrowers to default on loans.Homebuyers looking to buy in housing market renewal (HMRI) areas – particularly in north Liverpool – are most likely to qualify for the loans.It would be the first time in more than a decade that Liverpool City Council has offered them.mortgages.
Cllr Flo Clucas, one of the councillors who floated the idea at the end of last week, admitted mortgages would not be arranged for “£200,000 properties in the suburbs” but said the whole of the market would benefit from the extra liquidity.Cllr Clucas, deputy council leader and executive member for finance and Europe, said: “We can help low income families that are going to be frozen out or young people looking to have their first home. We think we will be able to help a lot of people who want to own their own homes.“We wouldn’t open this to everybody. We would be looking to help people in certain areas. But it would help people in the rest of the city, who would benefit from the housing market remaining stable.
”She and Cllr Marilyn Fielding asked Phil Halsall, the council’s director of resources, to look at the viability of the plans after he said he could see no reason not to proceed. Mr Halsall will now draw up a report for the Executive Board.If passed, it is thought Liver- pool will be the first local author- ity to re-enter the housing market.The council is thought to have stopped offering mortgages in the early 1990s.Then demand for Town Hall loans dried up as commercial loans became easier to obtain and building societies were under- cutting council interest rates. Last month, a study by the New Local Government Network think-tank recommended re- introducing them to help victims of the credit crunch. Their report said there was nothing barring the return of local authority lending.It is unclear exactly how the new loans would be arranged.Cash would probably come from either a partner working with the council or the open market.Liverpool City Council would act as guarantor and would underwriting the mortgages.Cllr Clucas added: “Officers are working on it as we speak. Phil Halsall says he will do what he can now. We will, if we can, put something in place as quickly as possible. ”Cllr Fielding, who is executive member for stronger, safer communities, named Norris Green and Breckfield as prime areas for council loans. She added: “There are more and more properties becoming empty in the north and people are having difficulty selling them. “This is a way to enable people to get houses through us. We don’t want properties becoming empty when there are people in desperate need to buy them.”
Leader of Liverpool’s Liberal group, Cllr Steve Radford, was “extremely supportive” of the principle, but criticised the intention to focus the scheme on HMRI areas.Cllr Radford said: “The principle is right and it is needed – As long as we have done proper individual risk assessments and lend over a long period of time. This is a real opportunity to help the community. There’s a social need, a market need and an economic need for the council to help the market, but this shouldn’t be restricted to petty bureaucratic borders which have not objective meaning.“It’s got to be city-wide and open to everybody. Focusing on HMRI would be administrative nonsense.”The Liberals, who are centred in the Tuebrook area, have recently asked for urgent debt counselling for their constituents.
Cllr Radford said he had seen a rise in borrowers defaulting on debts and local residents being enc- ouraged to use loan sharks.On the plans, the Council of Mortgage Lenders said: “We are pleased to see innovative responses to the difficult market situation.“We welcome the idea in principle and it’s good to see local authorities thinking creatively.”
(Article from: www.liverpooldailypost.co.uk)
