05 September 2008
Housing associations and local authorities are to head a £200m mortgage rescue scheme aimed at cutting the rising number of homes being repossessed.
Vulnerable homeowners will be offered a choice between selling a share or equity stake in their home to a registered social landlord, or selling the entire property and paying rent in the same way as other tenants.
The scheme, expected to help up to 6,000 families, was welcomed by the National Housing Federation. Ruth Davison, its director of campaigns and neighbourhoods, said: 'Many people at risk of being thrown out of their own homes will now be able to turn to a housing association for help.'
But councils, which will refer cases to RSLs, claimed the funding was insufficient and would only scratch the surface. 'Town halls are going to have a real job managing expectations locally,' said Paul Bettison, the Local Government Association's housing spokesman.
Mortgage lenders predict that about 45,000 homes will be repossessed this year – double the total for 2007. Sir Bob Kerslake, chief executive designate of the Homes and Communities Agency, told Public Finance that the rescue scheme was aimed at families in genuine difficulty. 'It's directed at those who can't pay rather than won't pay,' he said.
The scheme is part of a broad package of measures announced by Prime Minister Gordon Brown and other ministers on September 2, in their latest attempt to revive the housing market. Stamp duty is being scrapped for one year on homes worth £175,000 or less and the latest in the government's series of shared equity schemes – HomeBuy Direct – will offer first-time buyers a free loan worth up to 30% of the property for five years.
The government also announced that it is offering councils and RSLs an extra £400m from the three-year National Affordable Housing Programme immediately. The money, originally earmarked for 2010/11, will fund 5,500 homes over the next 18 months.
Kerslake said all councils had an incentive to apply for development grants – not just those with arm's-length management organisations. But the LGA doubted whether many authorities would opt to build homes unless they were given similar borrowing powers to RSLs.
Richard Capie, director of policy at the Chartered Institute of Housing, warned of the danger of building social housing without private-market homes close by. 'We must be careful not to sacrifice the goals of mixed and sustainable communities,' he said.
To coincide with the government's package, the Housing Corporation said it was allocating a further £307m for 6,000 affordable homes as part of its regular system of quarterly bidding under the NAHP.
The National Federation of Almos also welcomed the package but called for Almos to play a greater role by being allowed to buy back former council homes.
NFA chair Dennis Rees said: 'Whilst the government's £400m investment in social housing is to be applauded, there needs to be more rented affordable social housing available for those who cannot afford to buy their own home.'
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