A £1 billion housing package has been announced by Communities Secretary Hazel Blears aimed at helping first time buyers, homeowners at risk of repossession and to support the house-building industry.
The Chancellor of the Exchequer has also temporarily raised the stamp duty land tax threshold to £175,000 from £125,000 for one year from today (3 September).
In addition, the Department for Work and Pensions (DWP) is to reform Income Support for Mortgage Interest (ISMI) by shortening the waiting period before ISMI is paid from 39 weeks to 13 weeks but this does not apply until April 2009. The new limit for claims will also be increased to £175,000 from £100,000.
The measures to support the housing market in
Communities Secretary Hazel Blears said: "This Government is committed to practical action to help those most affected by the current state of the housing market. We are working to make sure everyone struggling to pay the mortgage gets support and advice. We are giving a leg-up to first-time buyers keen to own a place of their own. And by bringing forward our investment in social housing, we are both getting more decent, affordable housing ready for people to live in sooner, and helping the house building industry weather tough times."
Housing Minister Caroline Flint said that the Government is determined to play its part, and others must do the same: “Lenders should be exhausting all avenues before repossessing, including looking at how they could extend mortgage rescue schemes to householders."
Stephen Timms, Minister for Welfare Reform, added: "Our reforms to ISMI payments will simplify the system and make it easier for people who are eligible to claim. We will also increase the capital limit for new working age claims to take into account the value of people's homes today.
“The Government has been taking a pro-active response in addressing the current challenges in the housing market, including making funding available to buy unsold homes off the market, increasing shared equity support for first time buyers, expanding free legal representation in county courts for households at risk of repossession, and providing more debt advice.
“We have also strengthened the role of councils by establishing the first Local Authority Housing Companies, giving local authorities a greater say and role in building new affordable housing.”
In more detail the package comprises:
1. Mortgage Rescue: The £200 million mortgage rescue scheme should help up to 6,000 of the most vulnerable families avoid repossession. This will not help those who have acted recklessly or irresponsibly. It is targeted on those families who can no longer afford their repayments, and who would be eligible for homelessness assistance.
Local authorities will have a major role in this scheme assessing applications. Depending on their specific circumstances, eligible home owners will be offered one of three options:
Shared ownership: a registered social landlord (RSL) buys a share (enabling the purchaser to pay off some of their mortgage) and coverts the property to shared ownership by issuing a shared ownership lease.
Shared equity: a RSL provides an equity loan enabling the householder’s mortgage payments to be reduced.
2. HomeBuy Direct is a £300 million scheme which will help up to 10 000 first time buyers into affordable homeownership over the next two years. This applies to new-build properties.
Buyers will be offered an equity loan of up to 30 per cent of the value, co-funded by the government and the developer, free of charge for five years. As with other HomeBuy schemes, any first time buyers (single or joint applications) whose household income is under £60 000 will be able to apply.
Not only will this help first time buyers, but it will also support the industry by identifying buyers for their new homes.
3. An immediate £400 million boost for social housing delivering up to 5,500 more homes over the next 18 months. For the first time local authorities with existing stock will be able to apply for a grant to build social housing, alongside registered social landlords.
4. Working with Regional Development Agencies to support the most critical regeneration schemes with the most potential to transform their communities. Market conditions have led to some regeneration schemes slowing down or stalling.
Date: 2nd, September, 2008
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