Treasury Solutions HERTFORDSHIRE COUNTY COUNCIL LAMS
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HERTFORDSHIRE COUNTY COUNCIL LAMS REVIEW DECEMBER 2013 / JANUARY 2014 FINAL REPORT Introduction 1. Hertfordshire County Council, and a number of district / borough councils in Hertfordshire, launched the Local Authority Mortgage Scheme (LAMS) in November / December 2012 although progress to date is slower than would have been expected based on performance of similar schemes. 2. A full review has been undertaken and this report summarises the findings and includes a series of suggested actions. 3. It is essential that the information and recommendations contained in this report are read in conjunction with local data and knowledge as the LA’s knowledge of the local property market will be important in determining the most appropriate actions. Overview 4. 60 local authorities have now launched a scheme and 87 schemes are in place as many authorities have launched more than one scheme with the same lender, or more than one scheme with different lenders. The Scheme has supported almost 3000 mortgages and over £329m in mortgage lending. 5. The average utilization rate for £1m is 8 months. The quickest is 40 days and one scheme is still live two years after launching although the maximum loan size is low. 6. The average maximum loan size set by a local authority is £170,000 (£153k if the top value schemes of £350k are excluded). 7. The repossession rate is nil and there is presently only one mortgage in 3 months+ arrears, although the lender is working with the mortgage holder to agree a repayment plan. Background – Hertfordshire Schemes 8. The following Schemes have been launched in Hertfordshire: a. Hertfordshire County Council / Lloyds Bank – launched 23.11.12 i. Total Indemnity £2m ii. Maximum loan size£190k iii. Postcodes All cross boundary postcodes and non-live DC areas b. Hertfordshire County Council / Leeds Building Society – launched 23.11.12 i. Total Indemnity £1m ii. Maximum loan size£190k iii. Postcodes All cross boundary postcodes and non-live DC areas c. Broxbourne Borough Council / Lloyds Bank – launched 6.12.12 i. Total Indemnity £1m ii. Maximum loan size£190k iii. Postcodes All d. Dacorum Borough Council / Lloyds Bank – launched 27.11.12 (Closed 11.12.13) i. Total Indemnity £1m ii. Maximum loan size£190k iii. Postcodes All e. Dacorum Borough Council / Leeds Building Society – launched 23.11.12 i. Total Indemnity £1m ii. Maximum loan size£190k iii. Postcodes All Treasury solutions 40 Dukes Place, London, EC3A 7NH Tel 0871 664 6800 Fax 0871 664 6830 www.capitaassetservices.com Capita Asset Services is a trading name of Sector Treasury Services Limited which is authorized and regulated by the Financial Conduct Authority only for conducting advisory and arranging activities in the UK as part of its Treasury Management Service. Registered office: 71 Victoria Street, Westminster, London, SW1H 0XA. Registered in England No. 2652033 f. East Hertfordshire District Council / Lloyds Bank – launched 17.4.12 i. Total Indemnity £1m ii. Maximum loan size£160k, raised to £190k iii. Postcodes All g. Hertsmere Borough Council / Lloyds Bank – launched 27.11.12 i. Total Indemnity £2m ii. Maximum loan size£190k iii. Postcodes All h. North Hertfordshire District Council / Lloyds Bank – launched 27.11.12 i. Total Indemnity £1m ii. Maximum loan size£190k iii. Postcodes All i. North Hertfordshire District Council / Leeds Building Society – launched 23.11.12 i. Total Indemnity £1m ii. Maximum loan size£190k iii. Postcodes All j. Stevenage Borough Council / Lloyds Bank – launched 3.12.12 (Closed) i. Total Indemnity £1m ii. Maximum loan size£180,500k iii. Postcodes All k. Stevenage Borough Council / Leeds Building Society – launched 23.11.12 i. Total Indemnity £0.5m ii. Maximum loan size£180,500k iii. Postcodes All l. Three Rivers / Leeds Building Society – launched 23.11.12 i. Total Indemnity £1m ii. Maximum loan size£190k iii. Postcodes All m. Watford Council / Leeds Building Society – launched 23.11.12 i. Total Indemnity £1,250,000 ii. Maximum loan size£190,000 iii. Postcodes All 9. There are no live schemes in local authorities bordering Hertfordshire, although Schemes are now starting to go live in Essex. Activity – Hertfordshire Schemes 10. All activity as at 31 December 2013 is shown at Appendix A 11. Speed of utilization per £1m for closed schemes is as follows: a. Dacorum Borough Council / Lloyds Bank – 1 year b. Stevenage Borough Council / Lloyds Bank – 7 months c. All other schemes have now been live for over 12 months and East Hertfordshire for 1 year, 8 months. 12. Average property value and average mortgage value per scheme a. Hertfordshire County Council / Lloyds Bank – Property value: £175k. Mortgage value: £163K. b. Hertfordshire County Council / Leeds Building Society – Property value: £170k. Mortgage value: £161k. c. Broxbourne Borough Council / Lloyds Bank – Property value: £171k. Mortgage value: £161k. d. Dacorum Borough Council / Lloyds Bank – Property value: £173k. Mortgage value: £163k. e. Dacorum Borough Council / Leeds Building Society – Property value: £185k. Mortgage value: £175k. Treasury solutions 40 Dukes Place, London, EC3A 7NH Tel 0871 664 6800 Fax 0871 664 6830 www.capitaassetservices.com Capita Asset Services is a trading name of Sector Treasury Services Limited which is authorized and regulated by the Financial Conduct Authority only for conducting advisory and arranging activities in the UK as part of its Treasury Management Service. Registered office: 71 Victoria Street, Westminster, London, SW1H 0XA. Registered in England No. 2652033 f. East Hertfordshire District Council / Lloyds Bank – Property value: £160k average, lower due to number of months operating at a lower maximum loan value. Mortgage value: £152k average g. Hertsmere Borough Council / Lloyds Bank – Property value: £175k average. Mortgage value: £165,250 average. h. North Hertfordshire District Council / Lloyds Bank – Property value: £166k average. Mortgage value: £157k average. i. North Hertfordshire District Council / Leeds Building Society – Property value: £152,250k. Mortgage value: £143k average. j. Stevenage Borough Council / Lloyds Bank – Property value: £163k average. Mortgage value: £152k average. k. Stevenage Borough Council / Leeds Building Society – Property value: £167k. Mortgage value: £158k. l. Three Rivers / Leeds Building Society – Property value: Mortgage value: m. Watford Council / Leeds Building Society – Property value: £196k. Mortgage value: £186,200. 13. Analysis of Hertfordshire CC Scheme – There are 24 mortgages against the Lloyds and Leeds Schemes for Hertfordshire CC. An analysis of the postcodes is as follows: a. Welwyn Hatfield 16 (67%) b. St Albans 7 (29%) c. Hertsmere 1 (4%) 14. Qualitative Data at 31 December 2013 a. Average LTV % i. Hertfordshire County Council / Lloyds Bank – 92.95% ii. Broxbourne Borough Council / Lloyds Bank – 94.23% iii. Dacorum Borough Council / Lloyds Bank – 94.47% iv. East Hertfordshire District Council / Lloyds Bank – 94.77% v. Hertsmere Borough Council / Lloyds Bank – 94.43% vi. North Hertfordshire District Council / Lloyds Bank – 94.11% vii. Stevenage Borough Council / Lloyds Bank – 93.63% b. Average age i. Hertfordshire County Council / Lloyds Bank – 30 ii. Broxbourne Borough Council / Lloyds Bank – 30 iii. Dacorum Borough Council / Lloyds Bank – 31 iv. East Hertfordshire District Council / Lloyds Bank – 30 v. Hertsmere Borough Council / Lloyds Bank – 36 vi. North Hertfordshire District Council / Lloyds Bank – 30 vii. Stevenage Borough Council / Lloyds Bank – 31 15. Repossessions and Arrears – The national repossession rate is nil and there is presently only one mortgage in 3 months+ arrears, although the lender is working with the mortgage holder to agree a repayment plan. There are no arrears on any of the Hertfordshire Schemes with either lender. Lloyds Bank 16. All contacts to Lloyds are either through visiting a branch or via a phone call to the MaPA at Lloyds. There is one contact number for East Hertfordshire (Contact number 07841 490 966 – Stephen Bailey) and one contact number for all other authorities (Contact number 07515 096 203 – Malcolm Rose). Checked both numbers and both are correct. Treasury solutions 40 Dukes Place, London, EC3A 7NH Tel 0871 664 6800 Fax 0871 664 6830 www.capitaassetservices.com Capita Asset Services is a trading name of Sector Treasury Services Limited which is authorized and regulated by the Financial Conduct Authority only for conducting advisory and arranging activities in the UK as part of its Treasury Management Service. Registered office: 71 Victoria Street, Westminster, London, SW1H 0XA. Registered in England No. 2652033 17. Stephen Bailey answered. Malcolm Rose did not answer and a message was left and the call was returned later the same day. 18. Attempted to call two local branches – call redirected several times and eventually put through to the Gloucestershire number for mortgage applications and then to a Halifax branch. No information provided at any point regarding LAMS. 19. Level of Interest: Most contacts come from non-Lloyds customers who have read about it in the local paper or local flyers. 20. View of Scheme: Excellent scheme, very easy to operate and very attractive to customers once they are aware of it. Admission that there was some confusion locally about the Scheme initially (ie Lloyds’ staff uncertain re how to search for postcodes on the different schemes) but this has now been addressed. 21. Maximum Loan Size: Too low. Some applicants do manage to find properties under the maximum loan size limit, but for many, the limit is too low. There are quite a few flats and very small houses under the limit, but most applicants have been couples and they are seeking an average size 2/3 bedroomed house. There are parts of Hertfordshire (namely Stevenage) where property can be found under the limit, but for most areas, the maximum loan size is the barrier to entry. 22. Other: One of the MaPA’s asked whether the scheme could be extended in the high performing areas – eg Stevenage and Dacorum, as they were over-subscribed particularly in Stevenage.