27 February 2009
By Neil Merrick
Families struggling to make mortgage payments are missing out on government assistance because their homes are worth too much.
Housing associations this week joined councils in complaining that price caps set by the government for its £200m mortgage rescue scheme do not fairly reflect property prices in many parts of the country.
The National Housing Federation raised the issue with the Department for Communities and Local Government at a meeting on February 24 – just days after figures showed home repossessions are continuing to rise.
In North Yorkshire, where house prices typically range from £169,000 to £277,000, only households in properties valued at £130,000 or below are eligible for help.
The DCLG argued that help was aimed at families unable to use alternative solutions, such as downsizing. But Jean Butterfield, chair of the North Yorkshire Housing Partnership, said: ‘Either the government doesn’t understand, or doesn’t care.’
In London, the price cap is set at £295,000 – less than the average house price in all but two boroughs. Richard Blakeway, director of housing at the Greater London Authority, said families required more support than single people but tended to live in more expensive properties.
Ministry of Justice figures published on February 20 showed that 29,095 mortgage repossession orders were made in the final quarter of 2008 – 14% more than in the same period in 2007.
Meanwhile, the Council of Mortgage Lenders repeated its forecast that 75,000 homes will be repossessed in 2009, in spite of the fact that the final figure for last year was 40,000 – 5,000 fewer than the CML predicted three months ago.
The mortgage rescue scheme was fast-tracked by 80 councils in December before it was extended to the rest of England. Families can reduce mortgage payments by giving up part of their equity, or selling their home to a housing association and remaining as tenants.
A DCLG spokesman said it was investigating whether families whose homes exceeded the price cap could be helped in ‘exceptional circumstances’.
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