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Construction News
28/07/2009
Repossession Risk For Right-To-Buy
Consumer Focus is warning that targeted Government help is urgently needed for right-to-buy homeowners, as new research shows they are likely to be at much greater risk of losing their homes due to financial difficulties in the recession.
The new research reveals that right-to-buy mortgage-holders are twice as likely than others to have had problems paying their mortgage in the last three months - with almost one in 10 affected.
Right-to-buy owners with mortgages are also 50% more likely to have additional mortgages or loans secured on their homes. The watchdog is warning this is likely to increase the risk of repossession for many vulnerable households.
There are no official statistics on repossessions based on additional secured loans. However, according to Finance and Leasing Association figures, the number of re-possessions by their members based on second-charge lending was 1,588 in 2008, up 33% on 2007.
Previous Citizens Advice research has shown that many right-to-buy borrowers are susceptible to irresponsible lending practices, which may put their homes and wider finances under greater threat. Their research also showed that many such mortgage-holders often weren’t aware of the full impact buying their home would have on their finances, such as housing benefit not being available to pay their mortgage.
Jonathan Stearn, Consumer Focus Debt Expert, said: "Right-to-buy homeowners often live on low incomes and many will be very vulnerable. So, it is extremely worrying that our research has shown they are likely to be at much higher risk of losing their homes. The government must ensure people go into right to buy with their eyes fully open to the impact this might have on their rights and finances, and provide the level of help and support needed if they get into difficulties. Lenders should also be obliged to lend in a responsible way that takes account of the needs of right-to-buy consumers."
Consumer Focus is calling on the Government to implement a raft of measures to help right-to-buy homeowners as a group particularly at risk of repossession in the current financial situation. Early intervention would not only help the individuals affected, but could also have considerable cost savings for local and central government by reducing the numbers needing emergency homelessness assistance and council or other social housing.
(CD/JM)
The new research reveals that right-to-buy mortgage-holders are twice as likely than others to have had problems paying their mortgage in the last three months - with almost one in 10 affected.
Right-to-buy owners with mortgages are also 50% more likely to have additional mortgages or loans secured on their homes. The watchdog is warning this is likely to increase the risk of repossession for many vulnerable households.
There are no official statistics on repossessions based on additional secured loans. However, according to Finance and Leasing Association figures, the number of re-possessions by their members based on second-charge lending was 1,588 in 2008, up 33% on 2007.
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Previous Citizens Advice research has shown that many right-to-buy borrowers are susceptible to irresponsible lending practices, which may put their homes and wider finances under greater threat. Their research also showed that many such mortgage-holders often weren’t aware of the full impact buying their home would have on their finances, such as housing benefit not being available to pay their mortgage.
Jonathan Stearn, Consumer Focus Debt Expert, said: "Right-to-buy homeowners often live on low incomes and many will be very vulnerable. So, it is extremely worrying that our research has shown they are likely to be at much higher risk of losing their homes. The government must ensure people go into right to buy with their eyes fully open to the impact this might have on their rights and finances, and provide the level of help and support needed if they get into difficulties. Lenders should also be obliged to lend in a responsible way that takes account of the needs of right-to-buy consumers."
Consumer Focus is calling on the Government to implement a raft of measures to help right-to-buy homeowners as a group particularly at risk of repossession in the current financial situation. Early intervention would not only help the individuals affected, but could also have considerable cost savings for local and central government by reducing the numbers needing emergency homelessness assistance and council or other social housing.
(CD/JM)
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