Thursday, 27 November 2014

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.

Readers' comments (35)

  • Chris

    Recession is when two consecutive quarters of negative growth occur.

    These are therefore the recent recessions:

    4 quarters 1980 to 1981 (under Thatcher)
    7 quarters 1990 to 1992 (under Major first as Chancellor then as Prime Minister)
    4 quarters 2008 to 2009

    There have been no three year recessions as per the source you quote Gavin.

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  • Hark at the rank hypocrisy of many contributors to this forum who demonise tenants in receipt of benefit as scroungers and working tenants as being subsidised by tax payer and yet lauding the blatant tax payers subsidy of RTB and then feel sympathy for the mugs who didn’t read the lease before signing it and squeal like stuffed pigs when they get a massive service charge bill

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  • Alpha One

    mrkfm, the last recession was caused by lack of regulation, government encouragement that all should own their own home, and banks taking this is a licence to print money.

    The first two causes were a direct result a Labour government being in power. Major et al. had no plans to deregulate financial services, they were happy with the BofE's regulation. Likewise they had no policy on all must own homes.

    Banks, however, would have cottoned on to sub-prime lending and even with BofE oversight it would still have happened.

    Would there have been a recession, yes of course there would. It's called boom and bust, and Brown was a pillock to say he could end it.

    There is only one way to end boom and bust, that is to conserve the surpluses in the boom to counteract the deficits in the bust.

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  • Chris

    was at the heart of Thatcherism and Reagonomics - or have you never heard of their 'Big Bang', 27 October 1986. That was the day Thatcher achieved her financial revolution - the first day of what was to become our current economy.

    Now either you are historically challenged Alpha, or one of the worst government spin doctors ever employed.

    Go, read some economic history then come back and admit to your error.

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  • Chris

    Apologies for the loss of the start of the post

    Financial Deregulation was at the heart of Thatcherism and Reagonomics - or have you never heard of their 'Big Bang', 27 October 1986. That was the day Thatcher achieved her financial revolution - the first day of what was to become our current economy.

    Now either you are historically challenged Alpha, or one of the worst government spin doctors ever employed.

    Go, read some economic history then come back and admit to your error.

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  • One is constantly reminded how a little bit of knowledge is a dangerous thing when reading comments of the daily mail parrots on this forum

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  • Chris

    You would think that they would be celebrating the outcome of their economic miracle wouldn't you Omega. After all, we paid so much pain to achieve it, and watched so few gain the vast riches it delivered, and then saw it all disintegrate 22 years later - what's not to celebrate, except for those of us who paid to establish it are now paying for the clear up.

    I wonder why those who gained the vast riches across those decades are not being asked to chip in at least a little bit. Astonishing how the proles have swallowed the media feed 100% and fail to trust their own memories of the 1980's, what happened, and who lost.

    All the more reason to heed the message of this article and not run off to repeat the same mistakes (or repeat the same money machines from us to them, to put a truth to it.)

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  • This is from the current RTB consultation (Page27)

    "The impact assessment estimates the potential Housing Benefit implications of changes to the Right to Buy policy and, within this, the Department modeling currently uses a central assumption that the equivalent of 15 per cent of Right to Buy purchasers will be on full Housing Benefit. Given the high degree of uncertainty associated with this assumption, the Department has undertaken sensitivity analysis with the assumed proportion ranging from nil to 25 per cent of Right to Buy purchasers on full Housing Benefit."

    The words .... accident ...happen and waiting spring to mind, though I am not sure if it would count as an accident

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  • Chris

    Absolutely Tim - the government could have stated 'our proposals ensure up to 25%, and at least 15%, early reposssessions will be available to buy-to-let investors soon after purchase completion'. And they can say this from knowledge of the last time around - interestingly there are not supposed to be any official figures of how many RTBs were repossesed like this - makes one wonder if the government have been telling porkies again!

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  • the right to buy could have some merits, but is completely ruined by discounts up to 70% max £55 k .
    This is particularly wrong when its not based on the market value,
    our HA used 1990 valuations for its guidlines so tenants were offered the property at discounts based on at least half the real market value.
    A massive discount. If they sold they could make a massive profit, or rent it a the market rent.
    you ask the questions we weren't allowed to.

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