News from Labour Matters

Cash boost to keep struggling families in their homes

The Communities Secretary today announced a set of measures to help families struggling to pay mortgages in an attempt to prevent a wave of repossessions as the credit crunch and the downturn bite.

The £1bn package will enable vulnerable families who are no longer able to keep up with their mortgage will be offered the chance to sell their home and rent it back at a cheaper price.

They will also have the opportunity to enter into shared ownership of the property, and first-time buyers whose household income is less than £60,000 will be able to buy newly built properties with an equity loan of up to 30% of the home’s value.

“When you have got a problem, you deal with it. That is what people expect government to do,” Hazel Blears explained.

“We are not spending money we haven’t got. The money is there, let’s bring it forward, let’s get first time buyers into the market, let’s help the decent families who are really struggling with their mortgages,” she said.

“We are looking at about £200 million over the next couple of years for families who are struggling with mortgages, there will also be £100 million to help with mortgage interest payments to keep people in their homes,” she told BBC Breakfast.

“I think that is a very good use of money because otherwise you do end up spending a fortune… it is not just bricks and mortar when you get repossessed, it can destroy whole families.”

“The measures we have got today to help first time buyers will boost the housing market,” she later explained in a BBC Radio interview.

“We are saying that we and the housing industry will help with the deposit on houses for first-time buyers – you can get an interest free loan for 30% of the market value, you will not have to pay anything back for the first five years.

“We can’t run people’s lives, but we can try and help.

“Let’s try and keep you in your homes and help you through this difficult time in the market – with a little bit of help, we can keep people afloat.”

The Chancellor of the Exchequer, Alistair Darling, also today announced that stamp duty land tax will not apply to purchases of residential property of £175,000 or less – an increase from the previous threshold of £125,000.

Abolition of the 1 per cent duty is part of the Government’s plans to ease difficulties in the housing market and means that around 50 per cent of property transactions are now exempt from stamp duty.

This relief will apply to transactions with an effective date on or after 3rd September and before 3rd September 2009.

Gordon Brown said the Government was responding to people’s concerns about the housing market amid a gloomy economic outlook.

“Homeowners need to know we will do everything we can to keep the housing market moving forward,” the Prime Minister said.

“Help with stamp duty, help for first-time buyers, help to build more social housing, help to take unsold properties off the housing market, and help for people who get into difficulties – these are the things that a government should do to help people as we come through what is a difficult situation and show our economy is resilient and will come through these problems.”

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