NHF says banking reform must ensure lenders don't unreasonably change loan conditions to housing associations

Wednesday, 3 December 2008 12:00 AM

The National Housing Federation today said the banking reforms, to be implemented in the new Parliamentary session, must stop lenders from unreasonably changing the terms and conditions of loans - an issue which is threatening the delivery of new social housing across the country.

However, the Federation also criticised the Government for not using today's Queen's Speech to announce legislation to stop the big energy firms from overcharging the nation's six million prepayment meter customers.

Banking reform

The Federation says the banking reform, due to be implemented in the new Parliamentary session, must prevent lenders unreasonably imposing new terms on businesses.

Such a measure would safeguard the delivery of thousands of new social homes, as some lenders are making unreasonable changes to the terms of loans made to housing associations, meaning a number of associations may not be able to build as many new homes as planned.

With four million people on social housing waiting lists, and the building of affordable homes in rapid decline because of the economic downturn, this is an issue that could slow the delivery of social homes down to an almost complete halt.

Welcoming the focus on banking reform in the new Parliamentary session, Federation Chief Executive David Orr said: "The banking reform must stop lenders from unwittingly threatening the delivery of our nation's new social homes, by unreasonably changing the terms and conditions of loans given to housing associations.

"At a time when the building of new affordable homes is slowing down by record rates we need to remove any unreasonable obstacle to housebuilding.

"We are facing a housing national crisis - and housing associations, who build this country's social housing, need all the help they can get to carry on building through the credit crunch."

Mortgage Markets

The Federation has also said that the reform of banking must help kick-start the mortgage markets, which have currently seized up - as this is preventing thousands of people from being able to buy affordable homes.

David Orr said: "New lending to homebuyers has all but dried up and this is quite simply preventing thousands of people from buying affordable homes, many of which are now simply lying vacant.

"Ministers must use the banking reforms to kick-start the mortgage markets and allow those who can afford to buy to be able to buy.

"The Government should also use the nationalised Northern Rock bank to provide mortgages for families who would like to buy a home under the low cost home ownership programme."

Prepayment meters

The Federation has expressed great disappointment that the Government has failed to use the Queen's Speech to outlaw the overcharging of the nation's prepayment meter users - especially as the Prime Minister, Chancellor and Energy Secretary have all promised tough action.

Last March, during his budget statement, the Chancellor said the Government would legislate to stop the big energy companies from charging the nation's six million prepayment meter customers up to £500 more for their gas and electricity than those on the best deals available, unless the energy firms stopped the practice voluntarily.

Since then, both the Prime Minister and Energy Secretary have pledged to outlaw the practice unless the firms voluntarily stop charging prepayment meter customers more than anyone else.

Some commentators had suggested that the Government would introduce legislation today to tackle the prepayment meter issue, however the fact they have not will be a source of disappointment for many of the six million prepayment meters.

Federation Chief Executive David Orr said: "The Government has missed a big opportunity by not outlawing the overcharging of millions of prepayment meter customers in the Queen's Speech today.

"Millions of low income families on prepayment meters will be hugely disappointed that after so much talk, the Government has failed to act.

"This was open goal to score a major victory for justice and fairness and ministers have missed it."

:: For more information, please contact Nick Foley on 0207 067 1028/ 07748 931286 or Paul Rees on 0207 067 1026

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