An MHK believes the island’s banks were not ready to handle a new government first-time buyers scheme, leaving some would-be property owners in limbo.
The new initiative, a shared equity scheme, replaced the old house purchase assistance scheme on August 1.
Garff MHK and Speaker of the House of Keys Steve Rodan has blasted the ‘woeful’ lack of coordination between the banks and government on the matter after one of his constituents was caught in the middle.
Marc Corrin, 26, of Laxey, thought he was about to buy a flat in Onchan under the old scheme but then the arrangements changed.
Mr Rodan said: ‘I feel terribly sorry for Marc. This has not been a classic case of close co-ordination [between govt and banks].’
It is understood other people have found themselves in the same plight and may have blown their chance of stepping on the first rung of the property ladder.
Marc had been saving hard and seemed destined to qualify for the old scheme.
There was a delay over some paperwork, whch involved some documentation involving proof of earnings from his employers.
But Marc, who is currently off the island, and his family were under the impression it was a done deal.
Marc’s mum Lorraine Leckenby, 52, told the Examiner: ‘Although the scheme came in on August 1 the banks have not come on board with it yet.’
She said he had been expecting around £23,000 through the government grant under the old scheme.
His mortgage was approved through Lloyds Bank.
But the scheme changed to the new shared equity scheme on August 1 and he has to apply from scratch.
Mrs Leckenby said although he had secured help from Lloyds it could not apparently be transferred over to the new scheme.
‘The goalposts have been changed with this new scheme but unfortunately it appears the banks are not on board just yet.
‘He’s devastated. He’s a first time buyer it has taken him years to save up a deposit. He had saved up about £12,000.
‘He was never made aware that his mortgage would be null and void.
‘I rang the government department and they said there are a couple of other people in the same boat.’
Keen footballer and golfer Marc will have to carry on living at home in Laxey with his family.
His mum said: ‘I’ve sent him away from the island for a few days because he feels so gutted. But he has vowed that when he returns home this week he will go into battle on this issue.’
Marc had saved hard for years and was looking forward to buying the two-bedroom flat in Onchan. He had already spent nearly £1,000 on fees including a survey, said his mother.
The paperwork involved surrounds proof of income from the Royal Bank of Scotland International where he is an administrator.
Mrs Leckenby took up the matter with Mr Rodan. He has since been firing off emails to try to help his constituent.
Mr Rodan told the Examiner: ‘I feel sorry for this young man. He had made an application under the old House Purchase Assistance Scheme.
‘On August 1 the new scheme came in and quite frankly I don’t think the banks have prepared themselves sufficiently for this.
‘But equally I believe there was insufficent action by the housing department to liaise properly with the local banks to ensure there was a smooth transition [to the new system]’
He said it was clear the banks did not have the appropriate mortgage products in place when the new system was unveiled at the start of the month.
Mr Rodan said in his opinion he would have thought the government would have made itself absolutely sure that the banks were ready so there would be a ‘seamless transition’.
Mr Rodan believes there are two or three people who have been caught up in the overlap.
‘I would have made doubly sure that the banks were ready to roll on this by August 1.
‘I fear the property [Mr Corrin planned to buy] is now lost. I shall be pursuing this because it appears there has been a woeful lack of coordination and liaison between the banks and the government.
‘Buying your first home can be very stressful and is very much a life-changing moment. Setbacks like this should be avoided.’
He promised he would raise questions on the issue when Tynwald returned in October.
Meanwhile, Mrs Leckenby is left trying to console her downhearted son.
She said: ‘By now we should have been looking forward to buying the furniture and preparing to move in.
‘Sadly this does not look like being the case and I think it highly unlikely that he will be able to buy this flat because of the delays.’
Department of Health and Social Care director of housing Deborah Reeve told the Examiner: ‘The new Shared Equity Schemes enable the department to provide targeted assistance to help people buy their first home. This programme will make effective use of public money and provide a welcome boost to the housing market for first time buyers.
‘Local banks have participated in the lengthy consultation process around the development of the new schemes and three key lenders are now in the process of developing their mortgage products in response to the schemes’ launch.’
She urged people interested in applying for assistance to first contact the Housing Customer Services team on 685955 for a provisional assessment of their eligibility before approaching financial advisors or banks.
‘The department will carry out the necessary checks, including assessments of housing need and income. This can take up to six weeks but it depends on how quickly all the necessary information is provided.
‘There will likely be some questions during this period of transition, but I can confirm that applicants who have received a formal written offer of assistance under the previous scheme will be completing their property purchase under the terms of that scheme.
‘However, anyone who may have made an application under the previous scheme but has not yet been able to provide all the necessary information will be assessed under the terms of the new Shared Equity Schemes when that information has been received by the department.’
Peter Reid, island director of Lloyds Bank, said the bank had been a supporter of the House Purchase Assistance Scheme in the island ‘which has worked well in partnership with the government, and the Department of Health and Social Care.
‘This has helped many people buy homes on the island and we are pleased to see this continue with the new scheme which we support in principle.
‘We hope to finalise our internal processes over the next few weeks and look forward to adding this to our competitive range of mortgage products.’
Simon Scott, managing director of Barclays Isle of Man, said: ‘Barclays is supportive of the aims of the Shared Equity Scheme, which will assist first time buyers onto the local property ladder.
‘We are currently taking the necessary steps internally to agree the nature of Barclays’ involvement in the scheme.’