The scheme covers the 3,500-home Seedley and Langworthy area, and is likely to be extended to the 5,000-home Broughton district shortly. Prices of the old terraced housing in these areas have plummeted from £25,000-£30,000 to £5,000-£15,000 in the last decade.
Under the scheme, owners of homes to be cleared are offered a similar home nearby, bought by the council with Single Regeneration Budget money.
Someone with a £25,000 mortgage whose home is worth only £7,000 today could be offered a house worth £13,000. They would take their existing mortgage with them and the council could spend £5,000 on agreed repairs.
To create stability and regenerate the area, the council would take a charge on the difference between the value of the old and new houses. This would be discounted over five years, after which the owner would owe the council nothing.
Improvements to the area should also raise local prices and reduce the remaining negative equity.
The DTLR must grant consents to let the council take a charge on the new house. But changes in the pipeline would allow councils to go ahead under their own powers.
Salford council assistant housing director Bob Osborne said the scheme would free the council to buy up obsolete housing for clearance.
“We must reduce oversupply, and the land can then be re-used. Two major lenders are already signed up and working with us,” he said.
Council of Mortgage Lenders deputy director general Peter Williams warned the industry was not ready to sign up nationally yet. “There are lots of complicated issues. We must see if a national programme is feasible,” he said. “There is no agreement that the industry will find this acceptable but we look forward to seeing the pilot results.”
Source
Housing Today
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