Back in early 2009 when predictions for repossessions were approaching 100,000 the government set up its own sale-and-rent-back scheme.
It named it the Mortgage Rescue Scheme – an emotive term that regulated rent-back firms are banned from using.
To date, the scheme has helped 629 home owners stave off repossession. Great news for those who have benefited but the initiative has cost more than £180m – £300,000 per property.
The scheme’s budget for this year will not be reduced but the maximum funding per property will be cut from 65% to 55%.
The Council of Mortgage Lenders has described its original estimate of 53,000 repossessions for 2010 as pessimistic, primarily down to the Bank of England keeping the base rate at 0.5%.
The measures that have been taken by the government and lenders to keep repossessions down are welcome, everyone in the rent-back industry wants to keep families in their homes too, but there’s a cloud on the horizon as the CML says repossessions will stay high for years and most measures are simply delaying the inevitable.
Regulated rent-back providers look for sustainable solutions, and the government cutting back its scheme could be seen as an endorsement of authorised rent-back firms being in the best position to help struggling owners. Unlike the government scheme, there will be no cuts to our funding.