Government Help 'Excludes Those in Negative Equity'

by Peter Wakeford
Published on 4 September 2008
Government Help 'Excludes Those in Negative Equity'

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."

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Your Comments

sarah forrester
on 22 Jan 2009 21:17
I cant believe this! , I fall into this when I got my house it was worth 170,000 which I bought for 149,000 falling into diffcult times and getting into debt due to rising costs of living etc we got a loan which brought our total morgage to what the house was worth. We are now having to go repo and when we need help we cant get it. I know I wont be voting for Gordon Brown come electon time