Wednesday, 06 May 2015

Hundreds of residents needed mortgage rescue following first wave of the scheme

Warning over right to buy risk

A high proportion of homeowners who were bailed out by the government’s mortgage rescue scheme in the north of England bought their homes under the right to buy.

Figures from housing associations that run the scheme, which launched in 2009, reveal a major north-south divide, with some areas seeing as many as 50 per cent of all mortgage rescue applications for right to buy properties.

The revelation has prompted fears that the move to reinvigorate the 1980s policy could lead to a fresh round of financial problems as up to 100,000 tenants attempt to capitalise on increased discounts of up to 70 per cent.

In north Yorkshire, West Yorkshire and Humberside, at least half of around 400 rescues completed since January 2009 were right to buy properties. Homebuy agents in Merseyside, Greater Manchester, Tees Valley and County Durham all reported figures of at least 30 per cent.

Conversely, 20,000-home housing association Moat, which runs the scheme in the southern counties of Essex, Kent and Sussex, said it had come across just five right to buy properties out of 266 rescues it had carried out.

The news comes as the Chartered Institute of Housing calls for a rethink on the right to buy push.

Current proposals would see tenants offered discounts of up to 70 per cent, with a maximum of £50,000, doubling the discount available for some homes in the north east and north west.

Sally Lynch, head of space, property and development at Yorkshire Housing, which acts as the Homes and Communities Agency’s mortgage rescue agent in the region, warned the move could worsen the situation. Asked whether more homeowners could encounter financial trouble, she said: ‘If people are buying at a heavy discount, it could happen again.’

Charlotte Harrison, director of policy and the strategy at the Northern Housing Consortium, said: ‘We’re getting feedback that ex-right to buyers are trying to get properties off their hands, whether through mortgage rescue or their registered provider. That’s a worry with the new proposals coming in.’

Ben Clay, the director responsible for mortgage rescue at 13,000-home housing association Plus Dane, which runs the scheme in Merseyside, said the government should offer financial advice for anyone considering taking advantage of bigger discounts.

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