Councils to offer first-time buyers £70,000 deposits

Five local councils have signed a deal with Lloyds to offer first-time buyers subsidies of up to £70,000.

The tie-up could see a buyer purchase a home for £350,000 with a 20% deposit from their local council of £70,000 and a 5% deposit from their own savings.

Experts voiced concerns the initiative could backfire if house prices fall. Under the scheme if the property is repossessed the money invested by the local authority could be lost.

Lloyds said a loan of £350,000 was available but “not reflective” of the scheme, as it expected, in reality, to lend much lower amounts. If a buyer bought a lower priced property of £120,000, they would need to provide a 5% deposit of £6,000 and would be provided with £24,000 from the council.

The scheme designers, Sector Treasury Services, said caps would be set by each local authority.

The local authorities initially taking part in the scheme are Blackpool City Council, Warrington Borough Council, Northumberland County Council, Newcastle under Lyme Borough Council, and East Lothian Council.