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Property-based Loans

Deputy Prime Minister written question – answered on 27th June 2005.

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Photo of Tom Levitt Tom Levitt Labour, High Peak

To ask the Deputy Prime Minister what contribution to the cost of participation in local government schemes and services came from equity release or other property-based loans to service users, in (a) absolute and (b) percentage terms, in the latest period for which figures are available; and what assessment he has made of how this proportion will change over the next 10 years.

Photo of Phil Woolas Phil Woolas Minister of State (Local Government), Office of the Deputy Prime Minister

Under the Regulatory Reform (Housing Assistance) (England and Wales) Order 2002 local authorities have wide discretionary powers to provide assistance to homeowners and tenants to repair, improve and adapt their homes—including for example, equity release loans.

Since then there has been a slow switch from local authorities offering renovation grants to loans including equity release packages. The latest figures available show that authorities made available £1.2 million in loans for this purpose in 2003–04 (0.5 per cent. of total assistance given) and planned to increase this to £8.8 million in 2004–05 (2.7 per cent.). This compares with a total level of housing renewal assistance (grants and loans for home improvement) made available by local authorities of £256 million in 2003–04, increasing to a planned level of £325 million for 2004/05. Separate figures on the proportion of loans offered as equity release are not currently available.

Local authority's use of their new powers has been monitored through a research project sponsored jointly between the Office of the Deputy Prime Minister and the Joseph Rowntree Foundation and undertaken by the Centre of Urban and Regional Studies at the University of Birmingham. The final report of this study is expected to be published shortly. The preliminary conclusions of it are that the switch from grants to loans is proceeding at a relatively slow pace but that the majority of local authorities are now actively considering such a change.

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