Title

Housing minister, Caroline Flint, has revealed plans for homeowners struggling with mortgage payments to sell their homes to councils. Barely a month after it was revealed that Ms Flint was examining the idea, she revealed: ‘We are looking at that. I am looking at what more we can do with our colleagues in local authorities.' It followed Liverpool City Council's announcement of a feasibility study to review whether it could start offering mortgages. Phil Halsall, the council's director of resources, said he could see no reason not to proceed. But councils wanting to provide mortgages were warned by a top City law firm that the interest rate must be right to avoid being found to be acting ultra vires. Suzanne Benson, of Trowers & Hamlins, said: ‘Where local authorities want to provide mortgages directly to individuals, they cannot charge less than a minimum set interest rate. This is determined as the higher of either the average interest rate in that area or the national interest rate for mortgages. ‘Mortgage lending to the wider market would bring local authorities into new territory.' The current national interest rate, set by the communities secretary, is 6.89%, but this rate was last set in February 2007, and could be made more competitive. A CLG source told The MJ ‘all options are on the table' to put together the best package of measures to support the market and ‘serious interest' had come from developers. A CLG spokesman said: ‘We are taking action to support borrowers and industry in the current housing climate, including a £200m fund to buy unsold homes on the open market, more face-to -face debt and legal advice, and are constantly looking at what more we can do.'

Title

WHITEHALL

Flint unveils new plans to ease the mortgage misery

SUBSCRIBE TO CONTINUE READING