Government's housing market rescue plans: full details » Housing » 24dash.com

A major package of further measures and reforms designed to respond to current challenges in the housing market, are being announced today by the Prime Minister Gordon Brown and Communities Secretary Hazel Blears.

The new measures, revealed in full by 24dash.com, will help first time buyers facing difficulties entering the market; support vulnerable families at risk from repossession; and will deliver more affordable homes sooner, whilst also helping the house building industry.

They include:

• A new mortgage rescue scheme which will help the most vulnerable families at risk from repossession.
• A new shared equity scheme which will help first time buyers wishing to buy their own home.
• A boost in spending power for social housing providers, including registered social landlords and councils, to deliver more social houses by bringing funding forward.

The new measures have been developed by Housing Minister Caroline Flint, working with industry and lenders, and are part of a wider series of upcoming announcements to help alleviate pressures on consumers and industry.

The Government says it has been taking a pro-active response to address current challenges in the market, including making funding available to buy unsold homes off the market, increasing shared equity support for first time buyers, expanding free legal representation in county courts for households at risk of repossession, and providing more debt advice.

In more detail the package comprises:

1. Mortgage Rescue: For those most affected by the international credit crunch. By comparison with the 1990s, repossessions do remain low, but there has been a recent increase in numbers. The impact on family life can be immense.

The mortgage rescue scheme being announced will go significantly further, helping the most vulnerable families avoid repossession. This will not help those who have acted recklessly or irresponsibly. It is firmly targeted on those families who can no longer afford their repayments, and who would be eligible for homelessness assistance.

Local authorities will have a major role in this scheme assessing applications. Depending on their specific circumstances, eligible home owners will be offered one of three options:

• Sale and rent back: a registered social landlord (RSL) clears the secured debt completely and the applicant pays rent to the RSL at a level they can afford.
• Shared ownership: a registered social landlord buys a share (enabling the purchaser to pay off some of their mortgage) and coverts the property to shared ownership by issuing a shared ownership lease.
• Shared equity: a registered social landlord provides an equity loan enabling the householder’s mortgage payments to be reduced.

The level of support the RSL will offer depends on the assessment of the individual’s circumstances, which will include a review by a money adviser.

2. HomeBuy Direct: A new shared equity scheme which will help more first time buyers into affordable homeownership.

HomeBuy Direct will give eligible first time buyers keen to own a place of their own the chance to buy some newly built properties. Buyers will be offered an equity loan of up to thirty per cent of the value, co-funded by the government and the developer, free of charge for five years. As with other HomeBuy schemes, any first-time buyers whose household income is under £60,000 will be able to apply.

Not only will this help first time buyers, but it will also support the industry by identifying buyers for their new homes. This will help the housebuilding industry weather difficult conditions, so that, when the market recovers, they are ready to expand and get back on with building the new homes the country needs for the long term.

3. A boost in spending power for affordable housing schemes: The Government is committed to a major increase in affordable and social housing to meet demand and cut waiting lists. But with current challenging market conditions, providers are finding it more difficult to deliver their affordable housing schemes.

The Government will bring forward funding for social housing from existing budgets, delivering more social homes sooner.

For the first time, local authorities who continue to directly manage their stock will be able to apply for this grant to build social housing, alongside registered social landlords.

As well as delivering the social housing needed, this will also help to maintain capacity within the housebuilding industry, and help prepare the ground for the recovery in the market.

Communities Secretary Hazel Blears said: "This Government is committed to practical action to help those most affected by the current state of the housing market.  We are working to make sure everyone struggling to pay the mortgage gets support and advice.

"We are giving a leg-up to first-time buyers keen to own a place of their own. And by bringing forward our investment in social housing, we are both getting more   decent, affordable housing ready for people to live in sooner, and helping the house building industry weather tough times."

Housing Minister Caroline Flint added: "We are determined to continue to do everything possible to promote long - term stability and fairness in the housing market.

"The measures announced today will go significantly further in supporting families who may be facing difficulties at the moment, while ensuring we maintain our focus on delivering more affordable homes over the long term.

"We must ensure that repossession is only ever a last resort. The Government is determined to play its part, and others must do the same. Lenders should be exhausting all avenues before repossessing, including looking at how they could extend mortgage rescue schemes to householders."

Minister for Welfare Reform, Stephen Timms, said: "Our reforms to SMI payments will simplify the system and make it easier for people who are eligible to claim. We will also increase the capital limit for new    working age claims to take into account the value of people's homes today.

"The improved financial help that SMI provides will assist eligible homeowners with their mortgage interest payments should they get into difficulties.

"The Government has been taking a pro-active response in addressing the current challenges in the housing market, including making funding available to buy unsold homes off the market, increasing shared equity support for first time buyers, expanding free legal representation in county courts for households at risk of repossession, and providing more debt advice.

"We have also strengthened the role of councils by establishing the first Local Authority Housing Companies, giving local authorities a greater say and role in building new affordable housing."