Households at risk of repossession could be protected by a nationwide mortgage rescue scheme run by housing associations, under plans proposed by the National Housing Federation.

Under the proposals, housing associations would also buy up thousands of high quality, but currently unmarketable, privately built homes at discounted rates in order to ensure plans for bringing on stream higher numbers of social housing can still be met - despite the current housing market problems.

The proposed package has been submitted to the Government, the Housing Corporation and Homes and Communities Agency.

The paper in which the proposals are outlined, Protecting Households, Delivering Homes, suggests that the money already committed by ministers and housing associations to building new social homes over the next three years should be redistributed to allow housing associations to operate fair mortgage rescue schemes - and utilise developed and partially developed private sites that are currently sitting unused.


With the current market downturn, a number of unregulated firms are already purchasing properties from households in mortgage difficulties at 20% less than the market value and then renting the homes back to the households on an assured shorthold tenancy, giving no security for the tenants.

However, under the Federation's proposals, housing associations would buy the properties of households in trouble at a fair price and then allow them to either change tenure to low cost home ownership, enabling the household to buy their property back when their financial situation improves, or to social renting, enabling the household to remain in situ as social tenants. Such schemes are already being run by a number of housing associations across the country.

The Federation, which represents England's housing associations, also proposes that associations should be supported in buying land, developments with little progress and completed developments from private sector builders.

Under government targets published last year housing associations are due to build around 157,000 new homes up to 2010/11, using £8.4bn of public money and £12bn of housing association money. However, many experts believe that it may not be able to achieve this target in the way originally envisaged, because of the market downturn.

Federation Chief Executive David Orr said: "A weakening housing market will increase the number of unsold or difficult to sell properties - and sites available for purchase at prices lower than in recent years. This will create opportunities for housing associations and the affordable housing programme to continue to provide and, possibly, increase the supply of affordable homes. But only if the situation is managed effectively."

(CD/JM)