If you’re in danger of losing your home, help is at hand, says the Scottish Government’s Home Owners’ Support Fund leaflet. While help might be at hand a new survey of money advice agencies, law centres and CABx from across Scotland suggests help is now much more difficult to obtain.

Tough eligibility criteria introduced by the Scottish Government in March this year have created insurmountable obstacles for many homeowners desperate for help.

The Mortgage to Rent Scheme was first introduced in Scotland in 2003, and gave homeowners facing repossession the option of selling their home to a local authority or housing association, repaying their mortgage, and becoming a Scottish secure tenant.

In January 2009, the Scottish Government announced it was committing an extra £10m to this initiative, as well as the new Shared Equity Scheme, which enables the Government to take a financial stake in a debtor’s home. Both of these initiatives are collectively known as the ‘Home Owners’ Support Fund’. The fund has £35m pledged to it over two years, 2009/11.

The Shared Equity Scheme was launched on 16 March 2009, along with an ‘improved’ Mortgage to Rent Scheme. The new schemes introduced new eligiblity criteria including:

Failure to reach agreement with lender on managing your arrears;
New maximum property values based on the lowest 25% of property prices in regions across Scotland;
Have been unable to make full mortgage payments for three months with at least one month owing;
Must be ineligible for help through UK Government Schemes including income support for mortgage interest; and
Generally have less than 25% equity in your home.
Also, for shared equity you must hold at least 25% equity in your home;
Have a capital and interest mortgage (i.e. not an endowment); and
Own a property which is above the Tolerable Standard.

New researcg shows that advice agencies from all over Scotland are finding the new eligibility criteria and rules restrictive and unworkable. It isn’t rocket science. If you set very low property value thresholds then by definition you exclude 75% of Scots from help.

For example, a debtor’s three bedroom property in East Renfrewshire would have to be £105,000 or below in value to ever qualify for help under either of the schemes. When the average house price in East Renfrewshire is almost double that figure is it any surprise the Scottish Government’s flagship schemes are a post code lottery with no winners?

Money advisors have reported other obstacles. If you are eligible for help under the UK Government’s schemes, the Scottish Government say you are ineligible for help under their schemes. The rationale for this policy is absurd when you consider that a Scottish household out of work, on benefits, with huge unmanageable debts, are the very people who might need to use the Mortgage to Rent Scheme.

Of course they would be eligible to have their mortgage interest paid by the DWP, but this is often a short term solution, while Mortgage to Rent can provide in many cases an appropriate long term, sustainable solution for households. The worrying trend is that more Scots facing repossession are being refused help under the new Home Owners’ Support Fund.

Money advisors also report an increase in bureaucracy and delays. Cases
that are supposed to take 12 weeks can take a year. Delays impact on success – as the longer you wait, the higher shortfalls become, while other unsecured debts can turn into inhibitions which can scupper the entire process.

How many successful Shared Equity Scheme cases have there been in Scotland? Extremely few according to the feeback from money advisors.

In trying to improve the help available to Scottish households the Scottish Government have made things worse – much worse.

And before the Cabinet Secretary for Health and Wellbeing tells us it’s not as bad as in England or Outer Mongolia, let us be clear. We are in Scotland, and our safety-net against homelessness have been ripped wide open. The rules need to be fixed. These are non-statutory schemes, so this problem can be put right without another 8 month delay.

Mike