Liverpool house for £1: a good investment?
Filed under: House Prices
So is this a good deal for the buyers - and for the area?
Mortgage Advice & Info
The schemeThe homes were part of a regeneration zone, designated by John Prescott, in his Pathfinder scheme. The government bought up properties and the plan was to demolish them to make way for something newer and shinier.
A construction company was in talks with the council about a £25 million plan to re-develop the area, but after the talks fell through, the City was left with these empty properties.
The new plan, called the Homesteading scheme, is to sell the properties for peanuts, on the condition that they are renovated to a decent standard and that people live in them for at least five years.
The council said: "Residents would be expected to refurbish properties to Decent Home Standard, which means they must be in a reasonable state of repair, be warm, weatherproof and have reasonably modern facilities."
Landlords can tender to refurbish properties in the area too, and then buy the freeholds for £1. Meanwhile a development company will receive a number of properties, and will renovate them on the understanding that they will be sold on for 75% of market value.
According to the Daily Mail, the council will start with a pilot scheme of 20 houses.
Liverpool's deputy mayor and council finance chief Paul Brant told the Daily Mirror: "This allows people who may be excluded from mortgages but have construction skills to play a part in the regeneration of their communities."
Liverpool City Council's Cabinet Member for Housing, Councillor Ann O'Byrne, said: "We have been working closely with the local community over the best way forward for these areas, and I hope that these new proposals will give them certainty that the housing renewal they have waited for, for so long, remains a priority for us."
So will it work?The council has high hopes for the effect on the area. Brant told the Mirror: "It's been proven to work in other parts of the region. We've seen that the private sector model has not succeeded so far and, through this way of doing things, if there is any profit it will stay with local people."
It's not the first time this approach has been taken. It follows the same design as a scheme run in Stoke on Trent in August and September last year - with the same price, and the same rules. The pilot scheme there was for 35 houses. There were 500 inquiries about the houses in Stoke - including 230 from local residents.
For buyers this is a really good chance to get a foot on the housing ladder - if you have the skills to improve the property and you are committed to the area.
For investors, if you have the skills and the money to renovate a property, it could prove a good investment. Houses in the area can rent for between £400 and £500 a month, which means an investment of £20,000 in renovations, could be repaid and start generating an income within three years.
Of course you have to factor in all the risks associated with this sort of investment - including the fact that it could be vacant for some of the time. But there are clear opportunities.
However, there is one group of people who have missed out - taxpayers. It was us who paid for John Prescott to buy the properties in the first place. And although we don't know what they went for, you can be sure it was a great deal more than £1. You could see it as another way of investing in an area - or just a huge waste of cash.
Robert Oxley of the Tax-Payers' Alliance told the Daily Express: "Minister's meddling has needlessly wasted taxpayers' money. Liverpool needs more homes but Prescott's plan has hindered this process, not helped it."
But what do you think? Will this work? Let us know in the comments.