Housing Loans

By Author: gerri bellerssen
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Aim
The aims of public sector loans for housing are:

- to encourage and sustain home-ownership, including through loans for essential maintenance and repair;
- to release social housing for re-letting to people in housing need.

Key features
There are three existing schemes under which housing loans may be offered by the public sector.

The "Homebuy" scheme. The Homebuy scheme aims to help people on modest incomes who are trying to buy their own home, by offering them an equity loan of 25% of the value of the property. The main objective is to free up existing social housing and reduce waiting lists - so it is open only to existing social housing tenants, or those on a housing waiting list or nominated by the local authority as being in housing need. The scheme is Government funded, and administered by the Housing Corporation through registered social landlords (RSLs). Those taking out an equity loan under the Homebuy scheme simply repay the loan when the property is sold, [25] rather than making monthly repayments as borrowers would typically do for a commercial loan. The rest of the house ...
... purchase must be financed in the normal way, i.e. through private mortgage lenders, savings, etc. The Homebuy scheme started in 1999. Expenditure on Homebuy in 1999/2000 was ?19.86 million, on 885 loans.

Right-to-buy loans. Local authorities have the powers to offer mortgage loans to those who are unable to use private mortgage providers. In recent years, there have been very few such loans. Those that have been made relate mainly to right-to-buy sales (discounted sales of local authority housing to sitting tenants), for which local authorities have had an obligation to act as a lender if the purchaser is unable to secure private finance. In 2011, 19 local authorities made 112 loans, amounting to about ?2 million.

Other housing-related loans made by local authorities. The/re are also a few loans made by local authorities for house purchase, improvement, conversion and repair, including any compulsory improvement work by the local authority. The size of such lending is small - in 1999/2000, 13 local authorities made a total of 78 loans, amounting to ?627,000. These number of these loans have been decreasing for a number of years.

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