A good idea, but will it help?
Under a new scheme designed to help people stay in their homes, Not-for-profit housing associations will buy homes from people struggling to pay their mortgage and then allow them to continue living there. The government says the £200m scheme could help up to 6,000 households which might otherwise face repossession.
The English scheme is one of several initiatives launched or expanded to help homeowners in the downturn. The programme was devised last year by the National Housing Federation, which represents
England’s housing associations, and the Council of Mortgage Lenders.
It was already in place across 80 local authorities in England, but will be rolled out across the country from thjis week.
Northern Ireland, Wales and Scotland have, or soon will have, their own seperate initiatives in place.
Scotland has had a similar scheme since 2003, from which more than 700 households have already benefited. The Scottish government has said it plans to extend its existing mortgage-to-rent scheme, as well as developing a new mortgage-to-equity programme, which will help some owners keep full possession of their homes while substantially reducing their debt.
Wales also has a mortgage rescue scheme in place, involving housing associations registered with the Welsh Assembly government. Northern Ireland’s department for social development has issued a consultation document on setting up such a scheme, but has still to launch it formally.
Under the English scheme, the housing associations will buy homes at an independently assessed market price. Successful applicants will remain in their property either as tenants on “affordable” rent, or as owners after receiving a loan from a housing association.
It is intended that once their financial situation improved, the householder could pay back the loan in part or full. The scheme is targeted at families with small children, households with a disabled member, pensioners or those deemed “vulnerable” in another way.
People wanting help will apply to their local authority, and will have their finances assessed by a designated agency. The property will then be valued and the housing association will step in to buy it.
The government and lenders have been under pressure to offer help to homeowners who have hit hard times during the downturn and risk repossession. The government has expanded the Income Support for Mortgage Interest (ISMI) scheme, which means that the time before homeowners who lose their jobs receive financial help with the interest payments on their mortgage has been cut from 39 weeks to 13 weeks.
Another initiative, the Homeowner Mortgage Support Scheme, will allow households that see their income fall unexpectedly to defer part of their payments for up to two years. And under the Mortgage Pre-Action Protocol, lenders will be legally compelled to use repossession only as a last resort, having looked at other alternatives with the borrower, such as reducing monthly payments.
There can be no doubt that this scheme will have a positive impact, saving people from eviction from their homes is always good after all. But there is a real feeling of myself and many people I have spoken to that this scheme is too little too late.
