FIRST-TIME house buyers are to be helped by a local authority which is setting aside £1 million to encourage lenders to help them on to the property ladder.
Families, couples or individuals in the Highland Council area will soon get financial assistance to buy homes in some of the country's most beautiful spots.
Councillors are almost certain to decide tomorrow that Highland should become the first authority north of the Border to offer the Loch Authority Mortgage Scheme (LAMS), which provides cash guarantees of up to 20% of the property price.
It means that on a house costing £150,000 – a typical price for first-time purchase in the Highlands – prospective buyers would have to find a 5% deposit of £7500 on a maximum 95% mortgage of £142,500.
In addition, a 20% local authority indemnity of £30,000 will be held with Lloyds TSB Bank, the only lender operating LAMS in Scotland, which would underpin the mortgage application.
On this basis, the council could potentially help at least 33 first- time buyers get the house loans that were beyond them because of the size of deposits required.
But it could be more than 33 as not every purchase would need the full indemnity amount.
Yesterday, a two-bedroomed modern detached bungalow in Fortrose on the Black Isle was advertised with a fixed price of £152.000.
In the Raigmore area of Inverness, offers over £105,000 could secure a three-bedroomed mid-terraced house. On Skye, offers in the region of £95,000 are sought for a three-bedroomed house in Broadford.
The council believes its money will be safe as it would be held on deposit by Lloyds and only be touched if the buyers defaulted.
Potential default levels are estimated as low – at 1% to 2% – which should be more than covered by the interest the council's money will earn.
The scheme will be open to any first-time buyer living in the Highland Council area and should be up and running by July or August.
Some 76 councils have signed up to the scheme with 33 launched south of the Border – nine were fully utilised and are now closed. Some £43m of indemnities have been agreed in total.
The SNP/LibDem/Labour coalition administration on Highland Council are backing the scheme ensuring it will pass.
Black Isle councillor David Alston, the deputy leader of the council who heads the Liberal Democrats, described it as a win-win plan for the council.
He said: "The council gets a reasonable return on the money which will be coming out of reserves. But in return we get some people on to the property ladder.
"In so doing we also give a boost to the construction industry in the Highlands. The only danger would be if we were committing too much, but we are not."
He said the council was also increasing the number of houses for rent by building council houses for the first time in a generation. "But this will help those who want to move from renting to buy their first home," he added.
The report from officials to be considered by councillors tomorrow stresses it will be the Lloyds bank brand, rather than its Bank of Scotland subsidiary, which will operate the scheme.
The report added: "In practice, this means mortgage applications would be handled via Lloyds telephone mortgage centre. They would not be available within the Bank of Scotland branch network."
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