Housing Solicitors

The premature end of a scheme to help homeowners cope with debt and mortgage arrears could result in thousands of homeowners in London having their homes repossessed.

The mortgage rescue scheme was introduced by London councils in 2008, after the banking crisis led to the credit crunch.

The scheme was due to end in April 2014, but the Greater London Authority (GLA) has announced that the scheme could finish at the end of 2013. The end date has been brought forward in London, with the GLA saying London councils should not accept any further applications for interest-free loans.

The Guardian reports that some homeowners desperate to keep their homes have reached the final stage of the application process only to learn that the scheme has closed.

The mortgage rescue scheme offered interest-free loans to homeowners struggling to repay their mortgages – and sale-and-rent-back deals for housing authorities.

As many as 75,000 householders have received debt advice under the mortgage rescue scheme – while 5,000 have received interest free loans under the £200 million initiative.

The GLA has said, however, that take-up under the mortgage rescue scheme was “low” – and the scheme was expensive to administer, so it was “re-allocating” funding to increase the supply of new homes.

The mortgage rescue scheme is expected to continue outside London until 2014, however.

Jackie Bennett from the Council of Mortgage Lenders (CML) said that the mortgage rescue scheme had “delivered positive benefits in keeping some people in their home”.

The CML has also revealed a reduction in the annual average number of homes being repossessed for mortgage arrears this year – with fewer than 30,000 being repossessed by lenders. However, the CML concedes that expected rises in interest rates could impact on some homeowners.

The news of the end of the mortgage rescue scheme – which was rolled out across the country – also follows demands by some high street lenders for the government to set an end date for its Help to Buy scheme.

The Help to Buy scheme aims to get first-time buyers on the property ladder by allowing them to put down deposits of just 5% on properties up to the value of £600,000.

The Treasury underwrites part of the loan but mortgage lenders say they would like the government to set a time limit on the scheme, which was launched in October.

Critics of the Help to Buy scheme said that potentially it encourages first-time buyers to take on mortgages which they might not be able to repay – and could result not only in a property bubble, but also many new homeowners could lose their homes if property prices crash again, as in the later 1980s property bubble.

Homeless charity Shelter has recently revealed, however, that over the last 10 years there has been a 72% increase in the number of families with dependent children renting rather than buying in the southwest of the country. Many of these are living in poor rental accommodation as landlords capitalise on high rents and fail to repair properties – leaving some tenants having to pay for repairs on rental homes themselves.

Help with Housing Law

Duncan Lewis is one of the UK’s leading housing solicitors and can advise on a wide range of housing issues, including:

• Housing possession
• Mortgage repossession
• Local Housing Authorities
• Disrepair of rented property
• Housing Benefits
• Debt
• Landlord and tenant disputes
• Unlawful eviction.