Council chiefs have unveiled radical plans to help the housing crisis by launching a ‘Manchester mortgage’ for first-time buyers – and £25m of pension cash is to be used to build new homes. Bosses have identified five sites on which it aims to build nearly 250 properties for sale or rent as part of a pilot scheme.
The Greater Manchester Pension Fund will pay for the construction costs and the programme could be rolled-out over 10 years if it proves successful. As part its plans, Manchester council also wants to create a mortgage guarantee scheme to help people get on the property ladder by underwriting up to 20 per cent of their loan. New homes built with pension fund cash would be in Chorlton, Wythenshawe and Gorton Talks are underway with the Co-operative Bank and Manchester Building Society about the Manchester mortgage concept.
It would mean home-buyers would be able to get a 95 per cent mortgage on similar terms as a 75pc one, without the need to put up a substantial deposit. Town hall bosses have come up with the proposals due to the supply of housing in the city reaching an all-time low, with the number of house sale completions plummeting by more than 75pc over the last five years.
Coun Paul Andrews, executive member for neighbourhood services, said: “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.” Four sites owned by Manchester council and one by the Homes and Communities Agency have been identified for 244 new houses to be built. The council would form a joint-venture with the pension fund for the scheme. The council will invest land, while the pension fund will pay for all construction costs.
The plans for a Manchester mortgage would see the council team up with a High Street lender and underwrite up to a fifth of the loan for a fixed period of five years, which could rise to seven. The criteria for who would qualify for the scheme are to be decided. The council’s executive gave the green light for the partnership with the pension fund – whose members work for Greater Manchester’s 10 local authorities – to be formed. A pension fund spokesman said: “GMPF is working with the council to deliver new homes that will satisfy the fund’s twin aims of commercial returns and supporting the area. This type of investment will be part of developing a diversified portfolio. The initial scale of investment currently being considered is up to £25m. “The aim is to create an approach to investment that is capable of being applied across Greater Manchester. GMPF has a long history of investing a small proportion of its assets locally with the twin aims of commercial returns and supporting the area.”
New homes built with pension fund cash would be in Chorlton, Wythenshawe and Gorton