The government’s Mortgage Rescue Scheme helped fewer than half the number of people avoid repossession than originally planned, according to a damning report by the National Audit Office.
The scheme, which was launched by the Department for Communities and Local Government in January 2009, was expected to help 6,000 households avoid repossession at a cost of £205m, but only helped 2,600 at a cost in excess of £240m.
Under the scheme, home owners with 25% equity in their home can apply to their local council for a low-cost equity loan to help them reduce their monthly mortgage payments.
There is also the option for a registered social landlord to buy the house at 90% of its value and the person remain as a tenant.
The NAO report says the DCLG did not adequately test the demand for the scheme and that it could have acted sooner to improve value for money.
Amyas Morse, head of the NAO, says: “The department made assumptions about the level of demand for the Mortgage Rescue Scheme and made the wrong call.
“Spending more than expected and delivering less means that the department has not provided value for money.”