Monday, Mar 30, 2009
Your tax dollars at work
BBC: Council to offer 100% mortgages
Dundee City Council is set to become the first local authority in Scotland to offer 100% mortgages to tenants looking to buy their council home.
The authority believes it will help first-time buyers get on the property ladder and boost the local economy.
But critics accused the council of giving money to people who have already rejected by high street banks as too risky
Dundee Council stated that several councils in England had already started offering mortgages or were considering it "with a view to getting the housing market moving again, stopping the crash in house prices and helping bring the economic recession to a swifter end".
Posted by little professor @ 02:47 PM (833 views) Add Comment
13 Comments
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1. Penny Drop said...
This is insanity - giving 100% mortgages to buy council houses. Negative equity instantly. Toxic asset if ever there was one.
Aren't council houses supposed to be for those who cant afford to buy or rent a house in the private sector?
2. a saver said...
Durr, why do council tenants need to "get on the housing ladder"? They've got far more security of tenure than private renters and aren't they the most likely borrowers to default anyway? This policy also reduces the stock of council houses, so what is being achieved here? Unless the council want to offload their devaluing proeprties -nah, they're not smart enough for that!
3. paul said...
And a new subprime time-bomb is set ticking ...
4. tinker said...
There was a similar report about Bolton Council in February. (I wonder if it is the Labour Councils that are having pressure applied?)
" 'Town hall loan plan to help house-hunters'
CASH-STRAPPED house-hunters struggling to buy a home could be given an interest-free loan by Bolton Council.
... the authority could finance the loans with money set aside to build new affordable housing.
Would-be homeowners, who had exhausted all other options, could then apply for the loans to fund deposits or benefit from deals on properties which require no deposit.
... 'It is something we are considering. We constantly work with developers on a range of options and this is just one of them.'
The Executive is expected to affirm its commitment to exploring these options, which will be put forward to the cross-party Development and Regeneration Policy Development Group for further consideration before any decisions are made."
There did appear to be some cross-party support. Politicians really haven't got a clue. They appear to be wanting to use money set aside to improve the area (Section 106), they are actively considering using this money to entice FTBs into a falling property market whilst bailing out developers who have a glut of over-priced properties on their hands.
5. ana lytics said...
I assume the 100% they are quoting here must be 100% of the sale price to the tennant, which is heavily discounted under the RTB scheme....... 30% straight off + 1% per annum of tenancy, upto a maximum £amount depending on the council in question.
I.e. 100K house for a tennant who has lived there for 6 years would possibly get a 36K discount (depending on the local authority's maximum discount - ranges from 16 to 38K), giving a 64K mortgage on a 100K open market value house..........
6. Bear said...
So, my tax money used to pay somebody elses mortgage, boost houseprices so that houses are less affordable, and put local democracy at threat by lumping them with bad debt, eventually leading to yet more centralization of power in Westminster, Brussels and beyond.
Democracy and freedom to theive, counterfiet and re-distribute wealth, from the productive to the unproductive, with all the 'unintended' consequences, is not liberty.
7. bidin'matime said...
Deluded fools. I hope that a future tribunal finds the councillors who approved this liable for the losses that will inevitably arise.
8. timmy t said...
What is it with the Scottish and wreckless lending policy? Not wanting to sound racist, but you've got RBS, HBOS, the Dunfermline lot etc etc... And we've got Gordon Brown and Alistair Darling at the helm - we're all fooked.
9. phdinbubbles said...
"with a view to getting the housing market moving again, stopping the crash in house prices and helping bring the economic recession to a swifter end".
Dundee council vs Global financial meltdown.
Mmm, who's going to win that one I wonder?
10. timmy t said...
phd - Dundee is usually cake but on this occassion I suspect it will be toast - ha ha ha
11. inflation is eating my savings said...
worrying news on my own turf.
average salary must be well below 20k- high end stuff bought be outsiders and old money and solicitors of course.
2nd highest council tax in Scotland......
this might just be some hot air, much like the joint mortgages with your friends- how many people actually did that in the end?
Anecdotal data.... a friend had an offer today of 243k on an offers over 235k property. Bought for about 200k early 2006. It's a nice well kept Vicky 3 bed, being sold to a couple of profs (a doctor and something else). Apparently, this part of the market still works well. I presume this is what they call the Spring bounce.
12. a saver said...
inflation is eating.... whereabouts are you? We should have a Scottish HPC meetup, with Sue and others (I'm in rural Fife at the moment).
The property always goes up mentality is so entrenched here, that I'm STILL hearing about people buying investment properties.
13. inflation is eating my savings said...
a saver
good idea. I'm living in St Andrews and working in Dundee.
I'm not a techie, how does one set up a meet-up thing? Or maybe the informal route is better....