Repossessions have become a Government concern as the Treasury announced new rules yesterday aimed at protecting homeowners who are at an increased risk of losing their homes as the UK enters a recession.
According to the Council of Mortgage Lenders (CML
), around 45,000 homes will be repossessed this year, an increase of 25,000 since it predicted in January 2007 that possessions for 2008 would stand at 20,000.
As a result, the Government has announced new protocols which will help to ensure that repossessions are only used as a last resort. The new rules mean that mortgage
lenders will be expected to demonstrate that they have tried and discussed all possible alternatives to repossession with those who are falling behind with their mortgage repayments.
Commenting on the moves, Chief Secretary to the Treasury, Yvette Cooper, said: "We need to make sure we help those who might be hardest hit in the tougher times ahead, ensuring repossession is the last resort not the first. We also need to make sure that vulnerable homeowners are protected from exploitation and dodgy deals."
The measures will also look at sale and rent back schemes, which, according to an Office of Fair Trading report, may target vulnerable home owners and be detrimental towards them. The Government has consequently proposed that the schemes be brought under FSA regulation.
Commenting on the proposals, policy officer at the Royal Institution of Chartered Surveyors (RICS), James Rowlands, said: "With repossessions likely to total over 40,000 this year, these steps by the Government are essential to help the most vulnerable households avoid the trauma of losing their homes.
"The proposals on sale and rent back schemes are welcome but would be better as part of a joined up approach to property regulation and combined with wider changes to how the home buying process is regulated," Mr Rowlands added.
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