TEN houses which were being offered for sale at a discount in North Berwick have been bought by East Lothian Council, at a cost of more than £1 million, after developers were unable to find private buyers.
The properties, at Gilsland Farm in the town, were part of a CALA Homes development on the site.
CALA built 49 homes on the land with the agreement 12 would be affordable housing.
But attempts to sell these homes at a discount saw only two of them snatched up so the council stepped in to take on the remaining 10, with "local people in need of good quality housing now benefiting".
A report lodged with the council’s online members’ library service has revealed that officials approved plans to buy eight of the properties for £965,474, with two additional homes bought for £148,650 each, with those two to be immediately sold on to buyers who had been identified as qualifying for the discount scheme but who had been unable to get their mortgages in place before the council sale was concluded.
These properties would be sold under the discount scheme, which gives the purchaser 31 per cent off the market value.
The remaining eight properties will be added to the council’s housing stock; however, the report revealed they would not use them for social housing and instead planned to strike a deal with Lowther Homes, a branch of Dunedin Canmore Housing Association, to lease them out as ‘mid-market’ rental properties.
The report said : “As the discounted houses are located among private houses whose purchasers had been advised that the affordable units were to be for discounted sale, it was agreed that these properties would not be for council social rent but would be for mid-market rent.”
It also noted that a Scottish Government subsidy of £320,000 had been approved for the purchase of the properties.
The decision to buy the properties and then sell two and pass the rest to a third party to manage was criticised by SNP group leader Stuart Currie, who questioned the use of public money for houses which he said did not support people on council house waiting lsits.
He said: “I was surprised to see the decision to use rent and tax payers’ cash to buy houses on the open market and then immediately sell them at a heavy discount buried inside the council website. This raises a number of concerns.
“Surely rent payers’ money should be spent on new council housing that is for rent so that the waiting lists are reduced; that’s why the decision to rent some of the houses being bought at a mid-market rent just defies logic.
“There are substantial waiting lists in the area for council housing but this decision will not assist those who cannot afford the mid-market rents. These houses, bought using rent payers’ cash, should be council houses.
“There needs to be answers as to who authorised this and why it was not subject to scrutiny.”
Douglas Proudfoot, head of development at East Lothian Council, said: "Twelve affordable homes, built as part of a private development at Gilsland Grange in North Berwick, had been available to eligible buyers at a discounted level.
"East Lothian Council was then given the opportunity to buy 10 unsold properties. These were purchased by the council at a discounted rate with the full support of the Scottish Government, who provided a £320,000 subsidy.
"The cost of the discount for these properties is borne in full by the developer.
"As transactions had been ongoing when the council took ownership, two of the 10 properties were immediately sold to buyers at the same purchase price, with the council retaining the share of the discounted value.
"The eight remaining properties are now owned by the council. These have been leased for three years to Lowther Homes, who pay the council an annual rent for each property.
"The council has agreed criteria in place with Lowther Homes for the allocation of these homes which includes taking into account local connections of potential tenants to North Berwick and an affordability assessment.
"Local people in need of good quality housing have now benefited from this intervention by the council, with all properties now allocated in accordance with the criteria agreed with the council.
"This is a model which is fully in accordance with the council’s Local Housing Strategy and affordable housing policy, which seeks to deliver a range of affordable housing options for people in East Lothian."