Jan/100
Sale and rent back to right-to-buy home owners
Right-to-buy owners who have come into difficult financial diffculty are being tempted into “sale and rent back”. The scheme offers a way out for many homeowners who found themselves struggling to pay for a mortgage that should have neve been sold to them in the first place. A “sale and rent back” is whereby a homeowner sells their property to a private company at a discount price and in return are allowed to remain in their home as a tenant.
The overall appeal is obvious but But Denise Rooney of Chas Housing Aid Centre, Kirklees, says many schemes fail to deliver: “We have cases where people are allowed to remain in the home for a much shorter time than they were led to believe or the company they sold their home to goes bust, the debt is sold on and they are evicted.” This can result in famikies being left with no where to go or turn to, as they are deemed “intentionally homeless”. The statistcs are backed up by housing charity Shelter who note more than 600 households were classified as intentionally homeless due to mortgage arrears in 2008.
The “sale and rent back” scheme offers a hand to those in desperatefinancial times, but the human cost seems to outweigh the financial benefit.
Jan/101
Right-to-buy trap for homeowners
A recent survey concluded that people who buy their council homes under right-to-buy schemes are more likely than other homeowners to get into mortgage arrears and therefore risk losing their homes. The survey carried out by Consumer Focus between March and May found that nearly one in 10 who had bought their council home got into difficulty in the previous three months.
The findings came as no surprise to property experts such as Val Blood, of North Yorkshire Housing Advice Resource Project, who stated “During the property boom, council tenants were encouraged to take out mortgages they simply couldn’t afford,” she says. “Companies leafleted whole estates and especially targeted tenants in rent arrears with the promise of paying off what they owed and allowing them to buy their home as well. But if you can’t pay your rent, how can you pay a mortgage? Within a year many were facing repossession and often ended up homeless.”. A possible attriburte to this consequence was the fact that people who had taken out a mortgage on a council home were 50% more likely to have other debts secured against it. The positives of right-to-buy were projected way above the negatives and lured many people into taking a mortgage out and a risk they could not afford. Brian Coulson, housing lawyer at Bury Law Centre added, “There has been a lot of hard sell on TV and cold-calling from lenders encouraging right-to-buy homeowners to ‘release the equity in your home’. When you’re struggling to make ends meet, these offers are hard to resist.”
One such unfortunate right-to-buy homeowner, Glen Mason knows only too well the devastating effects of the right-to-buy scheme. “I thought buying the flat would make my retirement easier,” he says. The increasing outgoing payments to store cards and credit card debts soon mounted and Glen was unable to keep up his mortage payment. It came at the worst of times, when the recession hit Glen lost his job and left him in the most despertae of circumstances
Barclaycard and some of his other lenders successfully applied for charging orders, securing the money they were owed against Mason’s home. Last month a judge granted Mason’s mortgage company a possession order, and gave him 28 days to vacate his home. He stated, “What makes me angry is knowing that if I had still been renting from the council, housing benefit would have covered my rent when I lost my job and I would still have a home.”
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