Banks refuse to give mortgages to crofters 10/8/11
Crofters are being caught in a catch-
But the Croft House Grant is insufficient to construct a house so a commercial loan is needed to cover the difference.
However, banks say are steering clear of lending on croft houses because they wrongly believe the Scottish Government will have first call on the property if payments fall into default.
MSP, Alasdair Allan has denounced the bank’s attitude saying it badly hits islanders in rural districts .
Mr Allan said: “The reason given is often that the bank believe the Scottish Government, rather than themselves as lenders, would have first claim on the house should the mortgage default.
“I have now written to the Bank of Scotland and the Royal Bank of Scotland asking them how this squares with the Scottish Government’s own stated position which is that they do NOT in fact make any such claim on properties in these circumstances.”
Mr Alan explained: “The then Environment Minister Roseanna Cunningham wrote to me on 22 March, saying that ‘Where a building Society or a Clearing Bank provides assistance in connection with the erection or improvement of croft houses, the policy of the Scottish Government is to take secondary ranking and to allow the Building Society or Bank to take first ranking should this be required as a condition of the loan.”
He said: “I have therefore written again to ask the banks to make clear whether or not they accept the Government’s position, and if so, why they feel unable to lend to people who deserve the same chance of a mortgage in these difficult times as anyone else.”