People whose mortgages are bigger than the value of their properties will not benefit from Gordon Brown's housing reforms.
New measures from the government aimed at helping people who fall behind on their mortgage payments will not be extended to homeowners in negative equity, the Times reports.
The exclusion has been confirmed by the department for Communities and Local Government (DCLG), which means that millions of people will be denied help in avoiding repossession. Communities minister Hazel Blears announced a raft of housing reforms earlier this week, which also included a one-year suspension of stamp duty for home sales of £175,000 and under and a £1 billion new-build social housing scheme.
Negative equity occurs when the value of a homeowner's mortgage exceeds that of the home itself and comes about when house prices fall. With figures from the Nationwide showing that the average home has lost 10.5 percent of its value over the past year, millions of people are thought to be under threat.
Particularly affected will be those who bought towards the top of the market in 2006-07, and took out a mortgage which did not require a large lump sum deposit up front.
A spokesman for DCLG, the department overseeing the rescue package, said: "Homeowners in negative equity will not be eligible for the mortgage rescue scheme. However, it is important to remember that mortgage rescue is only part of a range of options the government has put in place to help families at risk of repossession, including expanding free legal representation at county courts, more free debt and advice, and on-going work with lenders to help ensure repossession is only ever a last resort."
