Pictured above: Philip Costigan, head of property at Band Hatton

A scheme which could help thousands of first time buyers onto the housing ladder has been welcomed by a team of legal experts - and it has urged city leaders to consider signing up.

Coventry-based solicitors Band Hatton has welcomed a pioneering move by five local authorities aimed at buyers who can afford a monthly mortgage repayment but do not have an adequate lump sum saved up as a deposit.

The Lloyds TSB-led scheme, called Local Lend a Hand, will see councils put 20 per cent of the house price in an account, with the lender asking for a 5 per cent deposit. The mortgage rate will be lower and the council receives a generous interest rate.

Local authorities involved so far are Warrington, Northumberland, East Lothian, Blackpool and Newcastle-under-Lyme and now Band Hatton have called on Coventry City Council to consider following suit.

Philip Costigan, head of property at Band Hatton based in Station Square, said: "Many first-time buyers are finding that mortgages in excess of 80 per cent of the purchase price are few and far between.

"Whilst that level of lending continues to assist those already on the property ladder, it is not very much help to the majority of first-time buyers.  

"Lenders are concerned that if the loan to value ratio is too high, they will be vulnerable to a further fall in property values, but if adequate mortgages are not available, this fear can become self-fulfilling.

"In the short term, the aim must be to return to a situation where the majority of prospective buyers are able to obtain some form of mortgage funding of at least up to 90 per cent, upon normal lending terms."

Costigan added that while the finer details needed to be ironed out, the idea should be welcomed in principle.

"We are aware that there have been some concerns expressed about the detail of the scheme, which will have to be very carefully considered, but in our view the idea is creative and to be welcomed," he said.

"No-one wants to see an overheating residential property market but first-time buyers are a vital ingredient of a market which is operating normally.

"The boost to the general economy of a normal market will be immense because if you buy a house, invariably you buy new carpets, curtains, white goods and so on - all of which adds to general economic activity, preserves jobs and creates more of a feel good factor."