Housing hope offered to redundant soldiers: Those leaving the forces may find it hard to obtain a mortgage but now there is help at hand. Mary Wilson reports

ON THURSDAY, 5,150 soldiers and 1,300 officers in the Army received a brown envelope containing their redundancy notices. In this second phase of lay-offs (the first was a year ago), around 600 officers are being made compulsorily redundant.

Not only will they be without a job, many will have no home to go to. They will receive 18 months' salary with extra gratuity and pension, which will be useful for putting down as a deposit on a property. But without a regular salary, they will find it hard - if not impossible - to get a mortgage.

However, a new accommodation scheme is available to ex-soldiers while they look for new work. Under a scheme devised by the Armed Forces Financial Advisory Services (Affas) and the Soldiers', Sailors' and Airmen's Families Association (Ssafa), the Birmingham Midshires Building Society is letting a selection of homes, at the moment about 150, to ex-service personnel and their families.

These will be let on a non-repairing 12-month lease at an annual rent of about 7 per cent of the property value, which is the formula normally used by housing associations.

With this arrangement, however, the property can be bought at any time during the year and any rent paid in the lease period will be deducted from the purchase price or used as the deposit. The sale price is agreed at the outset and is fixed for the year. At the end of the 12 months, the leases can be extended for another year.

It is expected that there will be strong demand for the scheme. Properties are mainly in the Midlands, South-west and North-west, but Birmingham Midshires is hoping to extend the spread by persuading other building societies to join the initiative. Although the properties tend to be repossessions, they will not be released unless they are in a fair condition.

Simon Johnson was made redundant last September from the Royal Engineers' bomb disposal unit. He and his wife, Shirley, had been looking for a house in Wales, but five possible purchases fell through. 'When I lost my job, all chance of getting a mortgage disappeared,' he said. 'We heard about the Birmingham Midshires scheme and rang up. There was a great number of houses to choose from - mostly repossessions which weren't much to write home about.

'Then we saw a five-bedroom Victorian semi in Wallasey (near Liverpool) which we loved. It costs us pounds 360 a month, and as soon as I get a job we will buy it. As that money is going to be the deposit, I look on it as living rent-free for a year.'

Those wishing to buy their home will be offered a first-year mortgage rate of 1.5 per cent below Birmingham Midshires' market base rate - now 7.99 per cent. And if the year's rent is paid upfront, it will be put in a special deposit account with a current net interest rate of 3.97 to 5.74 per cent, depending on the amount. This is between 0.3 and 0.85 per cent better than the society's other accounts.

Other schemes run by Affas include a health plan, motor insurance with a 5 per cent discount, and a helpline for redundancy counselling. There is also a special Armed Forces investment account with Birmingham Midshires, at the same rates as above. A bonus payment will be made if there are no withdrawals before the end of this year.

Affas holds regular seminars on tax, pensions and general financial planning. The next one will be on Tuesday at Bovington in Dorset.

The Affas helpline, 0532-343059, will be manned from 8am to 6pm, Monday to Friday. Its address is Willis Corroon House, 30 Park Place, Leeds LS1 2SP.

The Birmingham Midshires Building Society is based at 35-49 Lichfield Street, Wolverhampton WV1 1EL. Telephone: 0902 710710.

(Photograph omitted)