Mortgage Rescue Scheme to be cut

20 July 2010 | By Samuel Dale

Grant Shapps says the amount that home owners can sell to the council or housing association will be reduced from 65% to 55% which will allow more people to benefit.

He adds that the Scheme needs to be “refocused” to offer better value for money and claims the £180m funding could run out this year.

The current amount of money used will remain the same but funding levels will be looked at again in the overall spending review in October.

Shapps says: “The most effective thing the government can do for homeowners is to tackle the record deficit and avoid the need for rapid increases in interest rates.  But there must still be effective help on hand for those struggling to pay their mortgages.

“So today I can confirm that the Mortgage Rescue Scheme and Homeowners Mortgage Support Scheme remain available as a last resort to homeowners facing the real threat of repossession.

“But the most effective thing anyone with money worries can do is to not bury their heads in the sand and seek early advice to avoid losing their home.”  

The scheme lets people sell their property to a council or housing association and stay in it as a tenant but Shapps is prioritising deficit reduction.

The Mortgage Rescue Scheme allows people to sell part of the home in a shared equity deal to reduce mortgage payments and has helped 629 households set up in 2009.

Another 1,849 applications were ongoing by the end of March, the latest figures show. In these cases, lenders would hold off any repossession action.

But some in the housing industry want practical solutions to replace the scheme.

Pete Thomson, managing director of Residential Property Solutions Ltd, said: “Todays news is a bitter blow for approximately 50,000 families who are predicted to face repossession this year. The truth is that the scheme has been a dismal failure and has fallen well short of its targets.

“This type of government support has made little difference and, unfortunately, lender forbearance has simply delayed rather than cured the problem of repossession for many households.”

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