Liberal Democrats approve plans to tackle mortgage and housing crisis

September 12, 2008 2:35 PM
Originally published by UK Liberal Democrats

The Liberal Democrat Autumn Conference today approved the party's plans to help families who are unable to pay their mortgages and facing the threat of homelessness due to the downturn in the housing market.

The proposals, which aim to reduce repossessions and increase the stock of social housing, include: Introducing regulated Mortgage Rescue Schemes to allow families struggling with repayments to sell all or part of the equity in their house and rent it back from a housing association or private firm to help keep them in their home

Allowing councils and housing associations to borrow money to buy up land and vacant new homes for use as social housing

Giving courts guidelines to only allow homes to be repossessed as a last resort, making the mortgage lenders' voluntary code binding on all lenders

Commenting, Liberal Democrat Shadow Chancellor, Vince Cable said:

"After years of this Government's apathy, which allowed the housing market to boom hopelessly out of control, millions are now feeling the painful consequences of a market in freefall.

"With rising mortgage repayments and soaring food and fuel bills, many families are finding it impossible to make ends meet.

"Ministers should not try to turn back the tide of a housing market which needs to fall to a more affordable level. Instead they should concern themselves with the many thousands in danger of being cast out on the street.

"Rapid action must be taken to ensure that banks only ever repossess as a last resort.

"Now is also the time to allow councils and housing associations to borrow against their assets and build up the social housing stock for the many millions on waiting lists."

The full text of the conference motion approved today follows below:

Conference notes that:

i) House prices have continually fallen since last autumn, with further falls predicted, putting millions of people into negative equity.

ii) 1 million households spend more than two-thirds of their income on housing according to a recent survey by Shelter.

iii) The number of repossessions and repossession claims have more than doubled in the last five years, reaching a 15-year high in 2007.

iv) Under this Government the social housing safety net has dwindled from 4.386 million social homes to rent in England in 1997 to just 3.936 million social homes in 2006 while the number of households on social housing waiting lists has risen almost 70% to 1.67 million and notes that the Local Government Association predicts that this could rise to 2 million households by 2010.

Conference supports the policies passed in conference motion Homes for All in spring 2008 to increase the supply of sustainable social and affordable housing.

Conference acknowledges:

a) The current dramatic falls in house prices are the result of an unsustainable bubble that formed in the housing market fuelled by irresponsible lending.

b) Throughout the period of unsustainable growth in the housing market the Government made no attempt to deal with the housing bubble, or to crack down on irresponsible levels of lending.

c) That while it is not the job of government to prevent house prices falling to a more affordable level, it is not in the interest of the economy as a whole if negative equity and repossession leads to large numbers of people becoming homeless and over-indebted.

Conference therefore calls on the Government to:

1. Allow councils and Registered Social Landlords to borrow against their assets to buy up unsold properties and sites from building companies in order to replenish the social housing stock, to deal with the current 1.67 million households on social housing waiting lists.

2. Introduce a statutory Code of Practice for mortgage lenders to ensure that repossession is the only ever the last resort - all borrowers in arrears should be offered:

a) Free independent financial advice.

b) A chance to renegotiate the terms of their mortgage.

c) An opportunity to sell equity in their home to a Registered Social Landlord (RSL) and become part-tenants of that landlord, dependent on meeting the requirements of the RSL.

3. Protect vulnerable homeowners against rogue doorstep companies by regulating the private 'sale and leaseback' market as a financial service through the Financial Services Agency.