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Manchester draws up plan for new homes and mortgages

Wednesday, 8 February 2012 10:39 AM

Manchester has unveiled radical plans to underwrite the mortgages of first-time buyers and invest £25m of pension fund cash in building new homes.

The Manchester Evening News (MEN) reported that the city council has already identified five sites for 250 homes. These will be offered for sale or rent as part of a pilot scheme, with Greater Manchester Pension Fund paying the construction costs.

The homes will be built in Chorlton, Wythenshawe and Gorton. If the programme is successful it could be rolled out over 10 years.

The council also plans to create a 'Manchester mortgage', a scheme to underwrite up to 20 per cent of loans for first-time buyers.

It is in talks with the Co-operative Bank and Manchester Building Society about the plan, which would enable buyers to get a 95 per cent mortgage on terms usually only available to someone with a 25 per cent deposit.

Both schemes are a response to the supply of new homes in the city reaching an all-time low. Completions have slumped by 75 per cent over the last five years.

Councillor Paul Andrews, executive member for neighbourhood services, told the MEN: "In the current economic climate, the levels of development being brought forward and the availability of mortgage finance are not keeping pace with the city's needs.

"That’s why the council, working with Greater Manchester Pension Fund and the Homes and Communities Agency, is looking to bring forward an innovative new model for investing in new housing which will help address this issue."

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