Mortgage Rescue Scheme receives £5 million funding from the Welsh Assembly Government

Published by Edwina for Community Housing Cymru in Housing

Additional funding of £5million for mortgage rescue is welcomed by Community Housing Cymru (CHC), the representative body for the voluntary housing movement in Wales including Housing Associations and Community Housing Mutuals. In light of the current credit crunch and figures that show in 2007 lenders began more possession procedures in Wales than during any year since 1992 with a further 11% increase in claims issued, while the number of orders was up by 12% this extra funding will enable housing associations to help out people that would have struggled to keep their homes.[1]

Mortgage Rescue is where a household sells their home or a share of it to a housing association. Mortgage Rescue is offered after exploring other available options and in cases where there is an identified need. Assistance can vary between relatively small loans to complete purchase of the property. Those households whose properties are bought outright become tenants of the association with assured tenancies.

Cymdeithas Tai Clwyd operates a scheme in Denbighshire and Flintshire and Hafod Housing Association and Melin Homes operate schemes in South Wales. Since 2006 collectively these Associations have helped 60 individuals to secure their home through Mortgage Rescue at a cost of approximately £3.8m to their organisations.

"These interventions have a vital role in preventing repossession and homelessness for the households involved as well as allowing them to remain in the area and any children in the household to remain in local schools.[2]"

"These schemes also provide a preferable alternative to some private companies that offer sale and leaseback schemes which often require homeowners to sell the property at considerably less than the market price and rent it back with short-term security."[3]

Nick Bennett, Chief Executive of Community Housing Cymru, commented, "We are delighted that the government has made this announcement - along with greater freedom to purchase existing properties- this will allow associations in Wales to help more people who desperately need the intervention. CHC delivered a paper at the National Housing Consultative Forum last month at the minister's request and we are delighted to see this followed by positive action."

Prior to this announcement, Mortgage Rescue had received limited support from the Welsh Assembly Government. As a result some housing associations had to use part of their Homebuy allocation to fund this assistance.

The additional funding is a sign that the Welsh Assembly Government wants a greater role for housing associations in mortgage rescue. It is also hoped that the Review of Regulation will give greater financial freedom to housing associations accessing private finance, as a short term measure.

CHC will be working with its members, the WAG and other stakeholders to ensure that the aims of the Financial Inclusion Strategy for Wales are realised but believe that there would be great value in agreeing an action plan, outlining the responsibilities of all partners, for assisting those at risk of repossession given the current economic environment.

[1] Statistical Bulletin, Statistics on Mortgage and Landlord Possession Actions in England and Wales, (Ministry of Justice, February 2008, Issue Q4/2007).

[2] A Sustainable Option? Home ownership and mortgage possession actions in Wales. Shelter Cymru, March 2008.