Sector launches shared ownership scheme for councils
0Councils will soon be able to become joint property owners with individuals thanks to the creation of the Local Authority Partnership Purchase (LAPP).
Sector, the treasury management consultancy behind the Local Authority Mortgage Scheme is working on the LAPP with a view to launching before the end of 2013. Participating councils will purchase 30% of a property and receive rent on the share with the homeowner funding 70%. The council will provide an indemnity of up to 20% on the mortgage for five years as it does with the current LAMS.
Twelve authorities are piloting the scheme and are due to meet with Sector next week to discuss progress.
Meanwhile ratings agency Fitch says that the government’s Help to Buy scheme could increase margins for banks and will probably push up house prices. The initial scheme which began in April, plus the current second phase, could have an impact on sovereign gross debt, however, Fitch noted: “particularly if there is strong pent-up demand as the tighter loan-to value ratios that have prevailed since 2008 are relaxed.”
While the £12bn in guarantees under the second phase of Help to Buy as well as the £3.5bn in direct equity loans from the first phase could lead to higher contingent liabilities for the UK over the medium term, Fitch does not view Help to Buy as a threat to the AA+/stable sovereign rating.
