Page last updated at 11:56 GMT, Friday, 29 August 2008 12:56 UK

Councils 'could buy unsold homes'

Sale signs
The housing market has slowed considerably in 2008

Councils could get more powers to buy repossessed and unsold homes to let to tenants, ministers are expected to say.

Ministers are to unveil plans next week, which could also allow local authorities to buy a stake in the homes of buyers facing repossession.

A survey suggests house prices have fallen by their largest amount since 1990 in the past year.

An announcement on stamp duty is not expected. A source called stories of a holiday from the tax "speculative".

The government has been working on a package of measures to help people struggling with housing costs and the declining housing market.

Existing budgets

The Times reported that ministers would help local authorities to buy repossessed and unsold properties and to allow them to buy a stake in a property where the owner is facing repossession. They could then remain in their homes on a part-buy, part-rent basis.

A government source told the BBC those reports were "broadly in the right ballpark" and a package of measures would be announced next week.

We are determined to do everything possible to promote long-term stability and fairness in the housing market
Department for Communities and Local Government spokesman

The Council of Mortgage Lenders says some English councils are already offering the schemes but has called for one standard scheme to be introduced across the UK, to reduce repossessions.

A spokesman for the Department for Communities and Local Government said: "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.

"We are looking at a wide range of options to further support the housing market in the current climate, working closely with industry and lenders. What form that support will take will be announced in due course."

Price falls

England's National Housing Federation urged ministers to allow "mortgage rescue schemes" - letting housing associations to buy properties from those facing repossession and allowing them to stay on a part-rent, part-buy basis.

Chief executive David Orr said his organisation had put forward the proposal and were confident the government would adopt it.

"A mortgage rescue scheme would give people facing repossession the lifeline they desperately need and allow them to stay in their home," he said.

"Repossession should always be a last resort and the government must play their part in helping people to stay in their home during these difficult economic times."

For the Local Government Association, Paul Bettison said a "mortgage to rent scheme" was a step in the right direction but councils must be given more financial flexibility to raise the money needed.

On Thursday the latest survey by Nationwide suggested UK house prices had declined by 10.5% since August 2007 - the highest fall since 1990.

Liberal Democrat Treasury spokesman Vince Cable has said that, with such a big drop, it is likely about 300,000 owners are in negative equity - and that figure could quadruple if the drop continues.

Both the Conservatives and the Liberal Democrats have accused the government of stalling the housing market further by allowing speculation about a "stamp duty holiday" to cause would-be buyers to delay purchases.

But the government has denied making any proposal on stamp duty - Chancellor Alistair Darling has said a "number of measures" are being considered.

Latest figures suggest that some 18,900 homes were repossessed in the first six months of this year, up from 12,800 in the same period last year.




SEE ALSO
Call for housing market 'rescue'
27 Aug 08 |  Business

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