CML responds to government's draft legislative agenda

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Wednesday, 14, May 2008 12:00

The CML welcomed today’s announcement in the government’s draft legislative agenda of plans to provide more help for first-time buyers, in particular the widening of access to shared equity schemes. In future, all first-time buyers with an income of less than £60,000 will have the opportunity to apply to buy a share of their home.

Other measures announced in the legislative programme that will be welcome to lenders and their customers include:

An initiative to enable the Housing Corporation to allocate up to £200 million to buy new properties on the open market, to be made available either for first-time buyers to purchase through the Homebuy scheme or for social renting. Although this will have only a relatively modest impact on the housing market, it has the potential to widen the first-time buyer shared equity scheme.

Proposals to give the Bank of England greater flexibility to respond to credit market conditions by allowing short-term non-disclosure of liquidity assistance. Lenders believe the Bank should be able to respond flexibly to changing conditions in credit markets.

The CML also welcomed the separate announcement today of a market study of the sale-and-leaseback sector by the Office of Fair Trading. Lenders favour regulation of sale-and-leaseback to deliver fairer and more consistent treatment of home-owners who may be considering this option as a means of dealing with mortgage payment problems.

Commenting on the proposals, the CML’s director general Michael Coogan said:

“The government’s announcement on shared equity means that its approach is now more logical, providing help based on the income rather than the occupation of buyers. It will remove an anomaly by which providing help for one group of less well-paid workers makes access to home-ownership more difficult for others earning similar salaries but working in different jobs.

“The OFT market study in sale-and-leaseback is also welcome, and we hope it will be completed by September, as promised, and acted upon quickly. The reality is that sale-and-leaseback companies are already targeting home-owners in difficulty. The quicker we have effective regulation of the sector to provide protection for consumers, the better the safety net for borrowers in financial difficulty will be.”

NOTES TO EDITORS

1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 98% of all residential mortgage lending in the UK. There are 11.8 million mortgages in the UK, with loans worth over £1.2 trillion.

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