Agenda item

Recommendation from the Cabinet Meeting held on 9 July 2019.

That Council agree a new capital scheme ‘Council help to buy: Equity Loan Scheme’, with a budget of £0.580m funded from S106 receipts.

The Cabinet Member for Homes and Families introduced the report which sought approval for a new capital scheme to improve access to home ownership and promote low cost home ownership for younger households on median and low incomes.

There was a range of mixed views regarding the proposal.  Comments included:

·         The scheme would help young people trapped in the rental cycle to get on the housing ladder.

·         The council has a responsibility to ensure young people can afford to live in the borough.  The scheme will help young people on the housing register and help them to buy property rather than rent.

·         The Help to Buy national scheme is restricted to new builds which are in short supply, this proposal would help local people to buy existing housing.

·         Concerns were expressed regarding the significant legal risks identified in the use of S106 contributions for off-site delivery of affordable housing being used to fund the scheme and the eligibility criteria.

·         Concerns were raised regarding how assistance would be prioritised to those on the housing register and that the eligibility criteria was too narrow.

·         Whilst the scheme will help 20 households, there are many more on the housing register.

·         Concerns were expressed regarding the interest rate payment due after 5 years on top of the mortgage payment already being made and the impact that would have on the ability to move house.

·         Concern that the council is acting as a bank lending money to a select few residents when it should be improving services to all residents.

·         The S106 money could be put to better use such as a housing scheme at Sandringham court which could provide 13 new homes.

·         Many young people are living at home for longer as they can’t afford the deposit required to secure a mortgage.  The proposed scheme would provide a wider opportunity for young people to own their home and stay living in the borough.

·         Concern that a large number of people privately renting and housing association tenants would be excluded from benefiting from the scheme.

·         This is an example of the council using its reserves imaginatively for the benefit of residents who find it hard to achieve home ownership.

·         If S106 money is not used it would eventually have to be returned to the developer. The scheme would be a good use of a small amount of the money for the benefit of a group of residents.

·         The Invest to Grow Fund would have been a more appropriate source of funding for the scheme. 

·         S106 money should have been used for social housing, however there was no appropriate process in place, which should be addressed.

·         The capital receipts must be reinvested in the scheme or ring-fenced for social housing not used for other priorities.

The Cabinet Member for Homes and Families thanked Members for their contributions and confirmed that additional legal advice had been received which advised that it was appropriate to use S106 funds for the scheme and if the proposal was approved discussions would be had with developers to ensure they were content with the use of the funds.

A recorded vote was taken with 34 votes in favour of the recommendation and 23 votes against.

Resolved: To agree a new capital scheme ‘Council help to buy: Equity Loan Scheme’, with a budget of £0.580m funded from S106 receipts.