Lenders that repossess too quickly should face tough sanctions from the government, a government committee has recommended.
A report from the Communities and Local Government Committee entitled ‘Housing and the Credit Crunch’ argues that lenders’ attitudes and behaviour towards repossession should be closely monitored by government.
MPs are calling for more effective sanctions for lenders that do not comply with repossession guidelines.
They also want the Office of Fair Trading recommendation to regulate sale-and-rent-back to be implemented “as a matter of urgency.”
The committee would also like to see guidance for lenders repossessing privately rented properties to make sure these homes are professionally managed in the event of repossession.
Its report also calls for the government to take action on measures to restore the mortgage market, as well as clarification on how promised borrowing for social housing will be paid off.
Dr Phyllis Starkey MP, chair of the Communities and Local Government Select Committee, says: “The credit crunch has not reduced the numbers of households needing new housing, nor does it affect the need to address years of undersupply.
“The message which we received from witnesses during our inquiry was clear: the steps the government is taking are welcome, but further action is needed if it is to have a chance of meeting its targets for home building and achieving the goal of a decent home for all.
“We are particularly concerned that the government is borrowing from future budgets now with apparently no idea how it is going to restore that money at a later date.”