Housing Minister Grant Shapps today announced a new £20million safety net to help ensure that mortgage repossession remains the last resort for struggling homeowners.
This Preventing Repossessions Fund gives councils the opportunity to offer small interest free loans to struggling homeowners and ensure that court desks can offer on the day advice for those facing the prospect of repossession.
He urged anyone facing financial difficulty to use the range of free and independent advice available to get help and avoid losing their home.
Today’s new funding includes £1million to ensure that free, on-the-day, legal advice is on hand in every county court for homeowners at risk of repossession. This much needed legal assistance is available at court to any individual facing homelessness and today’s cash will ‘plug the gaps’ in the Housing Possession Court Duty Scheme ensuring that all courts are able to offer a viable service, where it is not already provided by the Legal Services Commission or independently.
In many cases applications for possession orders are rejected or suspended when a householder has access on the day legal advice - last year over 30,000 households benefited from the court duty desks.
Mr Shapps also gave a £19million cash injection to councils, so they can ensure that local people have access to real financial support to help allay the threat of losing their homes.
The Preventing Repossession Fund, which is being allocated to every local housing authority in England, enables them to offer struggling homeowners small interest-free loans of less than £5,000 or grants to help ease debt pressures and give them the breathing space to get back top of their finances.
Having the right advice and support on managing debts is crucial in helping homeowners to regain control of their debt. Alongside financial support those at risk of repossession should be given the knowledge and help to manage their finances in the future.
Local authorities are encouraged to work innovatively and flexibly with other local authorities, lenders and homeowners to ensure that the Preventing Repossession Fund is sustainable and tackles repossession in the best way for their area.
Housing Minister Grant Shapps said:
Repossession should only ever be the last resort. No one in financial difficulty should be embarrassed to seek help if they need it. Today’s cash ensures that no matter where you are in the country the advice and the financial support is on hand to help people get on top of their finances and keep them in their hard earned homes.
Getting advice early is important but even for people facing a court hearing repossession is not a foregone conclusion. By extending the reach of the Court Desk scheme we are ensuring that no one is left stranded without the support of the free on the day legal advice that has already saved thousands of families from repossession.
Today’s announcement comes as the latest figures from the Council of Mortgage Lenders show the number of homes taken into possession in 2011 to be 36,200, lower than the 40,000 originally forecast and the lowest since 2007.
Tackling the deficit to help ensure that homeowners don’t face rapid increases in interest rates is a top priority for Government and interest payments for mortgages are currently the lowest as a proportion of total income since records began.
The Government is also investing more than £200 million into the Mortgage Rescue Scheme. The scheme, available through local authorities, is designed to offer a last resort to the most vulnerable families to avoid repossession.
For homeowners struggling to keep up with mortgage payments and worried about the threat of losing their homes the Directgov website - www.direct.gov.uk/mortgages (external link) - has lots of free advice and information. Helpful advice is also on hand from organisations including Citizens Advice and the National Debtline.
Notes to editors
- £1million will be used to fund free legal advice for housing possession hearings within 54 courts that are not already funded by other sources. The funding will be distributed to 51 local authorities to commission a Court Desk scheme at their county court where one is not already provided independently or via the Legal Services Commission Each Authority will receive £18,500 per court desk in their area. The full allocation list is available at www.communities.gov.uk/documents/housing/xls/2084358.xls (Excel, 48KB).
2. Local Authorities have a statutory duty to ensure that information and advice to prevent homelessness is available. A Preventing Repossessions Fund (PRF) will provide an additional option for them to undertake activities they believe will assist in tackling repossessions in their area as part of their preventing homelessness strategy.
3. The Preventing Repossessions Fund has been allocated to all housing authorities. Allocations were based upon demand and reward.
4. Examples of how a Preventing Repossessions Fund could stabilise a households financial situation include interest free loans to pay off additional secured loans; loans to reduce arrears in exchange for lenders writing down debt to a more manageable level; facilitating access to the Mortgage Rescue scheme; or brokering a three way agreement between borrower (hardship payment), lender (writing off debt) and local authority (interest free loan). Loan payments would be conditional on the borrower acting on independent debt advice.
5. A key feature of such Funds are their recyclable nature which will enable an local authority to develop sustainable support over a longer period than one financial year. Local authorities can also pool their resources to develop economies of scale in delivery.
6. The Council of Mortgage Lenders published their repossession figures today, which can be found at: www.cml.org.uk/cml/media/press/3142 (external link).
7. Separate figures from the Ministry of Justice show that mortgage possession claims are eight per cent lower than the fourth quarter in 2010, and claims leading to an order between October and December were seven per cent lower than in the same period last year. Of the first orders made in mortgage possession claims, 49 per cent were suspended. These figures can be found at: www.justice.gov.uk/publications/statistics-and-data/civil-justice/mortgage-possession.htm (external link).
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