Page last updated at 11:52 GMT, Wednesday, 27 August 2008 12:52 UK

Call for housing market 'rescue'

Sale signs
The housing market has slowed considerably in 2008

A mortgage rescue scheme, and local authorities being allowed to buy unused land are featured in a Liberal Democrat plan to revive the UK housing market.

Lib Dem Treasury spokesman Vince Cable said that changes were needed to stop the "downward spiral" of the market.

Among the proposals are plans for councils to buy empty properties and developers' land-banks to increase the amount of social housing.

The Council of Mortgage lenders said any plan needs to be properly targeted.

Social housing

The housing market has seen annual price falls of more than 8%, a squeeze on the number of mortgages, especially for first-time buyers, and a slowdown in the number of homes being built.

Faced with these problems, Mr Cable told the BBC that there should not be an opportunity for easy repossessions by certain "trigger happy" lenders during a tough patch for borrowers.

Instead, he said that the housing trough offered opportunities for the social housing stock to be boosted.

Vince Cable
Mr Cable has been outlining the Liberal Democrats housing plans

Mr Cable said that the Liberal Democrat plan would assist the struggling housebuilders who were looking for cash to stabilise their positions.

He said councils could buy unused land owned by developers at a discount rate for use as social housing.

Mr Cable also called for lenders to go through the full and proper court process to repossess homes.

A proposal for a new, regulated mortgage rescue plan would allow those who were unable to make repayments on their home loan to stay in their property as tenants. The rent would be paid to social landlords.


The Council of Mortgage Lenders said that mortgage rescue plans were being considered in Wales, Scotland and Northern Ireland, with a handful of local authorities in England offering schemes.

Help should be available for those who can't pay, not those who won't pay
Council of Mortgage Lenders

Typically, a social landlord takes a share in the property, with the borrower paying a smaller mortgage for their share of the home and rent for the part of the property they no longer own.

But the CML wants a standardised scheme across the UK, leaving repossession as a final resort and reducing the numbers going to unregulated private offers of sale and lease back.

"It is important that mortgage rescue is properly targeted at borrowers in circumstances for whom it is appropriate. Help should be available for those who can't pay, not those who won't pay," said a CML report.

But the lenders' group said that if councils became more hands-on, even going as far as operating as mortgage lenders themselves, then they should be fully regulated in the same way as lenders in the private sector.

Credit crunch

A spokesman for the Department of Communities and Local Government said that they were studying various options to support the housing market during the current climate.

"We are determined to do everything possible to promote long-term stability and fairness in the housing market. The international credit crunch has created significant challenges not just for the UK housing market, but in other parts of Europe and the United States," he said.

He added that the government was providing cash for social landlords to buy unsold homes, as well as providing debt and repossession advice to struggling homeowners.

The Conservatives declined to comment on the Liberal Democrat proposals.

Housing charity Shelter said that the Liberal Democrat proposals included some good ideas, but more funding was required for them to work.

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