Edinburgh council to offer its own mortgages and buy up property

Published on Thursday 16 October 2008 22:04

EDINBURGH City Council is to offer mortgages and buy up homes which developers are unable to sell in a bid to ensure Scotland's capital survives a global financial meltdown.

The local authority is hoping to rent out its new properties at market or social rate in an attempt to attract more key workers to the area.

The move comes a day after The Scotsman revealed that luxury property developer Gregor Shore had collapsed into administration with a number of projects unfinished, raising fears over the fate of the regeneration of the Leith and Granton areas.

The collapse came as new unemployment statistics showed the biggest rise in Scottish joblessness in 17 years.

The data proved that Scotland is not immune from the downturn – and, in fact, has suffered the most in the UK in the past three months.

The Edinburgh City Council plan, drawn up by a specially assembled strategy group, was rushed through a meeting of the full council yesterday and the specific details are yet to be clarified.

As well as the ambitious property proposals, a new era of austerity is being ushered in – encouraging staff and businesses to turn off lights and become more energy efficient, helping deprived communities with budgeting and encouraging walking and cycling.

The homes scheme was welcomed by the city's property and business leaders.

Neil Harrison of the ESPC said: "Anything that helps first-time buyers is something we have been keen on for the last six months.

"We are a firm believer in the idea that if you bring 100 first-time buyers back, four or five hundred sell because of the ripple effect.

"The devil will be in the detail of what the council is offering but anything done to help the first-time buyer is something we will welcome."

Ron Hewitt, chief executive of the Edinburgh Chamber of Commerce, said: "Partnerships between the public and private sectors to advance affordable housing are very welcome at any time, but at this time in particular. It has to be a primary concern for a city that it is able to provide adequate accommodation for its growing numbers."

He said he was not concerned about the council having unsellable properties on its books as studies had shown there was massive hidden homelessness in the city and there would be huge demand to rent out the dwellings.

The Council of Mortgage Lenders, which represents more than 90 per cent of mortgage providers in the UK, said the Edinburgh system would have to allow for "a level playing field for providers and clarity for consumers".

The authority also plans to lobby the Scottish Government for more investment in affordable housing. It wants the capital to have greater priority in the national housing investment programme.

The plan was agreed a day after the SNP administration at Holyrood announced 100 million of spending on affordable housing was being brought forward.

A Scottish Government spokeswoman said: "If Scotland is to emerge stronger from the current economic downturn affecting economies across the globe, we need to take action across the public sector and at all levels of government.

"We are interested in what the City of Edinburgh Council is proposing and we look forward to hearing more details on this and discussing future proposals with them."

The council says its "Economic Resilience Action Plan" will help safeguard jobs and maximise opportunities to build affordable homes.

Jenny Dawe, leader of the Council, said the buy-up plan was a "robust response to the new world we're in".

She added: "We are diversifying our economy, so that we are not reliant on financial services – with science and technology a particular strength – and we have a workforce which is one of the most highly educated in the UK."