COMMUNITIES AND LOCAL
GOVERNMENT News Release (217) issued by COI News Distribution
Service. 2 September 2008
A major
cross-government package of new measures to meet current
challenges in the housing market was announced today.
A £1 billion housing package announced by Communities Secretary
Hazel Blears will help first time buyers struggling to get onto
the housing ladder, support vulnerable homeowners at risk of
repossession, and support the house-building industry.
The Chancellor of the Exchequer has also today announced that
stamp duty land tax will not apply to purchases of residential
property of £175,000 or less.
In a third step, the Department for Work and Pensions (DWP)
announced new support measures to help vulnerable homeowners meet
their mortgage interest payments. The DWP announced it would be
reforming Income Support for Mortgage Interest by shortening the
waiting period before SMI is paid from 39 weeks to 13 weeks for
new working age claims from April 2009. The capital limit for new
working age claims will also be increased to £175,000 from April 2009.
The measures announced by Ms Blears, which are the next steps of
an on-going programme of action to support the housing market in
England, include:
* Offering 10,000 first time buyers currently frozen out of the
mortgage market the chance to get onto the property ladder through
a new £300m shared equity scheme;
* Supporting up to 6,000 of the most vulnerable homeowners facing
repossession to remain in their home through a £200m mortgage
rescue scheme;
* £100m investment to support SMI reform which could help prevent
a further 10,000 repossessions;
* A £400 million boost in spending power for social housing
providers, including registered social landlords and councils, to
deliver 5,500 more social houses over the next 18 months by
bringing funding forward;
* Working with Regional Development Agencies to support the most
critical regeneration schemes with the most potential to transform
their communities.
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.
Notes to Editors
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 £200 million mortgage rescue scheme being announced tomorrow
will go significantly further, helping up to 6,000 of 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:
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 householders mortgage payments to be reduced.
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.
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 £300 million scheme which will help up to
10 000 first time buyers into affordable homeownership over the
next two years.
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. An immediate £400 million 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 has decided to bring
forward £400 million for social housing from existing budgets,
delivering up to 5,500 more homes over the next 18 months. For the
first time local authorities with existing stock will able to
apply for this grant to build social housing, alongside registered
social landlords. As well as delivering the social housing so
desperately needed in many areas, this will also help to maintain
capacity within the housebuilding industry, and help prepare the
ground for the recovery in the market.
4. Working with Regional Development Agencies to support the
most critical regeneration schemes with the most potential to
transform their communities. Market conditions have led to some
regeneration schemes slowing down or stalling. This can the limit
the potential of these schemes to transform lives in deprived
areas. We are keen to take action where possible to alleviate
these effects. As part of this package we will be working with
RDAs and the HCA to look at possible interventions on projects
that will deliver the most significant regeneration benefits.
News Releases: http://www.communities.gov.uk/newsroom