Would-be homeowners, frozen out of the housing market by the squeeze on lending, could be offered a lifeline by a new £15m Nottinghamshire County Council mortgage support scheme.
The scheme, thought to be the biggest of its type in the country, would help around 500 first-time buyers on to the property ladder and breathe new life into Nottinghamshire's housing market.
The County Council is set to team up with the Lloyds Banking Group to deliver the scheme. It is aimed at first time buyers who can afford mortgage repayments but do not have the 20-25% deposit currently required by lenders.
Under the plan, approved mortgage applicants would only have to pay a 5% deposit for the property, with the remainder of the deposit being put up by the County Council.
The money will be provided from County Council reserves and would be paid back by the lender five years into the mortgage term.
The scheme would only be open to first time buyers purchasing a property worth £150,000 or less.
According to Right Move, the current average property price in Nottinghamshire is £122,368. For a property of that value, the applicant would need to pay £6,118, with the County Council providing an indemnity equal to £24,473. This would give the applicant access to a mortgage on the same terms as they would get for a 25% deposit.
Average house prices across Nottinghamshire vary greatly. For example:
Sutton-in-Ashfield - £106,286,
Mansfield - £113,394
Newark - £137,507
Worksop - £115,711
Retford - £138,333
Eastwood - £113,420
Arnold - £132,962
West Bridgford - £235,956
Councillor Reg Adair, Chairman of Finance and Property Committee at Nottinghamshire County Council is to announce plans for the scheme at a meeting of the committee today, ahead of formal proposals being considered by the Policy Committee in December.
Councillor Adair said, "One of the biggest problems facing first time buyers in Nottinghamshire today is the astronomical amounts being asked by lenders for deposits. A 25% deposit for the average house in Nottinghamshire equates to more than £30,000, which is way beyond the means of most people.
"The mortgage support scheme we are proposing will make a dream home reality for 500 individuals, couples and families. It's good news for taxpayers too - not only is it a safe investment, it will stimulate the housing market and benefit businesses ranging from estate agents and surveyors to DIY shops and tradesmen.
"We believe the level of funding we are proposing to put behind the scheme will make it the biggest of its type in the country and reflects the positive impact we believe it can have on both the lives of hundreds of Notts residents and the county's economy."
The proposals have been welcomed by Richard Watkinson & Partners Estate Agents, which has seven branches throughout Nottinghamshire.
Manager, Kirsty Keeton said, "This is great news for the residential market in the East Midlands and a further boost following the announcement that the country is emerging from the double dip recession.
"As one of the largest privately owned estate agents in the region, we are all too aware of the strong demand that exists in the first time buyer market and the impact that deposit requirements are having. Many first time buyers simply don't have 20-25% deposits in the current climate and unless thy can access alternative funding such as family help, they stand little chance of ever being able to save the sums required.
"The new scheme announced by Nottinghamshire County Council will help to bridge this gap and enable a market where there is latent demand to take their first step onto the housing ladder, which can only be good news for both the first time buyers and the wider residential market in the East Midlands."
If the scheme is given the go-ahead by Policy Committee next month, it is likely to be launched and available for first time buyers from early 2013.
Applications will be made through branches of Lloyds TSB.
Information about the scheme is available at www.nottinghamshire.gov.uk/mortgages