I do not have to worry about the volume, because I have a very sound set of proposals.
I beg to move,
That leave be given to bring in a Bill further to regulate the relationship between mortgagor and mortgagee; to make provision, in circumstances in which a mortgagor is unable to meet mortgage repayments, for shared ownership of a property between mortgagor and mortgagee; to permit local authorities and housing associations to assume the responsibilities and rights of mortgagees in certain circumstances; to require the Secretary of State to report to Parliament on the resources and requirements of local authorities and housing associations in respect of shared ownership of housing; to make provision for a mortgagee to rent a property to its mortgagor if he is in repayment arrears; to place a duty upon lending institutions to make arrangements for the management of a mortgagor's debt before seeking repossession of a property; to make the cost of shared-ownership purchases eligible for housing revenue account subsidy; and for connected purposes.
The Bill could just as easily have been called the Mortgage Rescue Scheme Bill, or the Mortgage Choice Bill. It is a radical measure that is both innovative and important. It is important because it addresses the serious problem of home repossessions because of mortgage arrears which are getting worse because of the Government's high interest rate policy. We now have the highest interest rate in the industrialised world. Interest rates are the Goverrment's sole weapon to tackle the consumer credit boom that they unleashed to win the last general election. As United Kingdom production has not kept pace, we have a £20 billion per annum balance-of-payments crisis. By using interest rates, the Government are taking it out on recent home buyers.
Interest rates are reflected in mortgage rates, which have increased from 9–8 per cent. to 15.4 per cent. in just over a year. The average new mortgage holder in the United Kingdom is paying £144 a month more, and £250 a month more in London. The chief executive of the charitably owned estate agency, Andrews, said, "It is absurd to expect young people with expanding familites to take on 25-year home loans, budget for repayments out of tightly controlled incomes and then have their monthly mortgage commitment soar within six months." That is what has happened, and many hundreds of thousands of households have been trapped because high mortgage rates have become an integral part of the Government's economic strategy.
It has led to an arrears time bomb. Recently, I asked a couple of parliamentary questions about the numbers of people who were six to 12 months in arrears. the Treasury Minister replied that, on 31 December last year, the figure was some 58,000 households. It is significant that he chose December: a more recent date would have revealed a much higher figure, as it has rocketed since then.
When I asked the Minister about those between one and six months in arrears, he refused to answer, saying that he had nothing more to add. The Council of Mortgage Lenders certainly had something to add, saying that more than 500,000 people are in that category and the numbers are soaring. In its July newsletter, the Council of Mortgage Lenders said that in 1989, there were some 47,093 repossession orders in England alone, and that there had been a marked increase in the south-east.
The Association of London Authorities reported that, in 1989, well over 600 households had been accepted as homeless in London as a result of repossession. Probably many more people have been rehoused by local authorities, but other reasons have been given. All the signs are that there will be a substantial increase in those numbers this year.
My Bill is timely and necessary. It would help a large number of hard-pressed mortgage payers who are currently suffering because of high mortgage rates and they are fearful of repossession. Let me outline the main proposals. First, a mortgage payer would be able to convert part-ownership, scaling down his ownership in the property, so that the repayments become manageable. Effective, it would buy people time over a five-year period.
Secondly, a mortgage payer could convert to shared ownership, so that a local authority or housing association could take over the mortgage with rights in the property. That local authority or housing association would then receive the revised mortgage payments, and the rent and its capital would be returned when the property was sold. The purpose of such a scheme would be for repayments to become manageable for the mortgage payer. My Bill contains a mechanism to prevent soaring house prices from causing such damage. If there were excessive lending by the building societies, the part-ownership period would be longer and the local authority could charge a transfer fee on the building society to take over that mortgage.
The third option would be for the mortgage payer to convert from ownership to rental with the local authority. That is Labour party policy, and it would avoid people being thrown out into the streets. That would enable a mortgage payer to get back on his feet; there would be nothing to stop him repurchasing the property, as the Bill does not interfere with right-to-buy provisions. If a mortgage payer, through no fault of his own, cannot maintain the repayments, even under a shared ownership scheme, he could enter a rental arrangement with the local authority so that he would not be evicted.
The fourth major provision in the Bill would place a duty on the lending institutions to seek contract with mortgage payers to sort out alternative arrangements prior to any court action for repossession. It is a scandal that a minute or two minutes in court without the mortgage payer knowing what is happening can cause someone to lose his home. That is happening at the moment, and my Bill would stop it.
The fifth major provision of the Bill is that the Secretary of State for the Environment will have to report regularly to the House on the special funds that he will provide to local authorities, such as the new borrowing arrangements to enable them to undertake shared ownership schemes and the special grants to housing associations.
The housing finance regime would have to be altered. Of course a cost would be involved, but it would be a capital cost, because it would increase local authorities' borrowing allocation. In the meantime, revenue—repayments and part rents—would be coming in. It would benefit local authorities' income generation and it would mean less, not more, on poll tax bills. It must be cheaper than the cost of homelessness and the wasteful cost of bed and breakfast.
My Bill would apply only to mortgage payers in genuine difficulties and not to those who are in wilful arrears. That would be easy to operate, because the criteria for whether they were in wilful arrears would be the same as the definition of intentionally homeless in the homeless legislation.
The question must be asked: if I can provide some protection and choice for hard-pressed mortgage payers, why cannot the Government? There was nothing in the Budget or in the Finance Bill, which we shall consider next week, and they still have nothing to offer. They simply do not have the political will, because they do not care about struggling home buyers.
The Prime Minister recently spoke of a scheme to convert rents to mortgages, about which she gave no details, but that does nothing to stem the current flood of mortgage repossessions. I remind the Government that there is no choice if there is coercion, and high rents are coercion. Once ordinary people are on the Government's scheme, they lose all their rights of security because of the high mortgage rates that prevail.
My challenge to the Government is to accept my Bill and their scheme. Otherwise, they are only pretending to deal with this serious problem; they are only teasing about owner-occupation when they are prepared to snatch away home ownership.
The principal solution is low interest rates—that is the main part of Labour's policy—but there is a strong case for providing the protection and choice that I propose for mortgage payers. They certainly should not be made to bear the brunt of the national economic mismanagement. My Bill is a new way to defend and to extend home ownership, and I commend it to the House.