Councils to begin mortgage rescue scheme next week

27 Nov 08
Families at risk of having their homes repossessed are to start receiving help from next week, after 60 councils agreed to fast-track a £200m mortgage rescue scheme brought forward in the Pre-Budget Report

28 November 2008

By Neil Merrick

Families at risk of having their homes repossessed are to start receiving help from next week, after 60 councils agreed to fast-track a £200m mortgage rescue scheme brought forward in the Pre-Budget Report.

About 6,000 households will be given the option of reducing their mortgage payments and giving up part of their equity, or selling their home to a housing association and remaining as tenants.

The rescue scheme, which was not due to begin until the new year, is also being extended to cover loans taken out on a property.

Other measures in the PBR included further support for some households with mortgage interest payments and £15m more for free debt advice. Major lenders, meanwhile, have agreed to wait at least three months before starting repossession proceedings.

Housing minister Margaret Beckett said: 'We expect lenders to do more to build on work already under way to help their customers.'

A long-awaited review by Sir James Crosby, published on the same day as the PBR, urged the government to intervene in the mortgage finance markets. The banking system is going through three years of major restructuring that is likely to cause pain to consumers and 'risks accelerating the weaknesses in the housing market', it said.

The government is also bringing forward £425m from 2010/11 for decent homes work and maintenance.

A further £150m will provide an estimated 2,000 extra social rented homes, including unwanted private homes bought from developers.

David Orr, chief executive of the National Housing Federation, said grant rates must rise so that RSLs pay less towards the cost of each home. 'The situation is so serious that associations simply won't be able to build new social homes next year,' he warned.

The Local Government Association said ministers should have provided more money for mortgage-to-rent schemes. It urged the government to allow councils to retain the £200m surplus that will be raised in rents this year but clawed back by the Treasury.

Ministers welcomed a further review, commissioned by the Department for Councils and Local Government and the Department for Business, Enterprise and Regulatory Reform. This recommended a major reduction in bureaucracy surrounding the planning system. The report, by chief executive of Essex County Council, Joanna Killian, and the former group chief executive of Barratt Developments, David Pretty, said councils and businesses could save £300m annually through less red tape, including taking 40% of minor commercial planning applications out of the system.

The CBI also praised the review. Business environment director Neil Bentley said: ' It shows that £39m a year could be saved by making the local planning system more efficient and effective. Government should act swiftly to cut bureaucracy, which is in the interests of applicants and local authorities alike.

'Planning fees have gone up by 50% over the last four years. Making savings should now be the priority for local authorities and the government.'

PFnov2008

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