Page last updated at 12:35 GMT, Friday, 29 May 2009 13:35 UK

Slow start for mortgage help plan

A derelict house
The Mortgage Rescue Scheme was extended across England in January

Only two households in England have been given help in the first four months of a £285m mortgage rescue scheme, figures show.

About 1,084 households - fearing mortgage repayment difficulties - approached local authorities in April alone, government data shows.

But only one contract was signed in April and one in March, both by householders in the east of England.

It takes three to five months to complete a case, the government said.

Other claims are in the pipeline, the figures show.

The scheme allows not-for-profit housing associations to buy homes from people struggling to pay their mortgage and then allows them to continue living there by paying "affordable rent".

The government said the scheme - introduced across England in January - could help up to 6,000 households which might otherwise face repossession. The scheme initially amounted to £200m, but an extra £85m was added in April's Budget, to help other struggling borrowers.

Northern Ireland, Wales and Scotland have, or soon will have, their own initiatives in place.


While 1,084 households approached local authorities for help in April, less than half - or 452 - were eligible.

This is yet further proof that the Mortgage Rescue Scheme is failing
Grant Shapps, Shadow housing minister

To qualify for the scheme, you have to be at risk of repossession and be either elderly, disabled, pregnant or have dependant children.

Of the 452 households that were eligible, 139 households applied to join the scheme in April. A total of 376 applications - including applications made earlier in the year - are now under consideration.

More than 70 of those 376 applications are in the final stages of the process, a spokesman for the Department of Communities and Local Government (DCLG) said. This means that any repossession action against them by their lender has been frozen.

On average, 1,000 households have approached local authorities across England every month this year in search of help. Even though they might not have been eligible for the home rescue scheme, they had benefited from free advice, the DCLG spokesman said.

The first person to be successful in an application was single mother Emma Whitford, 40, of Fairstead. She was struggling to meet her mortgage commitments after ill health prevented her working.

She went to King's Lynn and West Norfolk Borough Council, which approached housing association Orbit First Step for help. She now rents back her home where her family has lived for two years and the three children can remain in the same schools.

Some 78% of the 303 councils taking part submitted April data to the DCLG. Some local authorities in England have delayed setting up the scheme.


The figures have prompted debate over the success of the scheme.

We expect many more householders to be helped in the coming months
Margaret Beckett, Housing minister

"This is yet further proof that the Mortgage Rescue Scheme is failing," said shadow housing minister Grant Shapps.

"Ministers promised that it would offer 'real help now' to homeowners living with the threat of repossession. Gordon Brown should now try telling that to the thousands of families being frozen out of this scheme and losing their homes as a result."

But Housing Minister Margaret Beckett said: "At this early stage we are seeing the scheme having a positive impact on vulnerable homeowners facing repossession.

"We expect many more householders to be helped in the coming months."

Scotland has had a similar scheme since 2003, from which more than 700 households have already benefited.

Wales also has a mortgage rescue scheme in place, involving housing associations registered with the Welsh Assembly government. Northern Ireland's department for social development is in the process of setting up such a scheme.

The English scheme's newest element offers a loan to people struggling, in order for them to reduce their mortgage payments.

It is part of a package of measures brought in by the government, which also includes a plan to allow owners who suffer a sharp drop in income to defer up to 70% of their mortgage interest payments for up to two years.

Lenders are also legally compelled to use repossession only as a last resort, having looked at other alternatives with the borrower, such as reducing monthly payments.

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