Money advisors in Scotland will be well aware of the new rules for the Mortgage to Rent and Shared Equity schemes (collectively known as the Home Owners' Support Fund). The new rules introduced in March 2009 have created additional hurdles which can make it impossible to access help. One new rule is explained as follows in the official Scheme guidance:
"You must be ineligible for help through other UK Government
support schemes such as Income Support for Mortgage Interest".
Now, money advisors and law centre solicitors will tell you that when someone loses their job (through illness or the economic downturn)they may be eligible for Income Support for Mortgage Interest but this may be impractical, for example, because the Department of Works and Pensions only pays mortgage interest at an average rate, and does not pay anything towards the capital element of a mortgage; so arrears may continue to grow, while repossession looms.
Before the March 2009 changes, the fact someone might be eligible for DWP assistance was irrelevant to eligibility for the Scottish Mortgage to Rent Scheme. The letter below from the Scottish Government to North Lanarkshire CABx is interesting for two main reasons.
First, the Scottish Government have made a policy decision that any help under their schemes can only be considered if no help is available under a UK scheme. Why? Advisors will look at all of the schemes and see what is best for the client's personal circumstances. It makes no sense to force a household in Scotland to use a UK scheme if that cannot provide a sustainable solution.
Secondly, the letter clearly states that the Scottish Government have in fact changed their rule: we are willing to consider applications in exceptional circumstances where people can show that assistance from these UK schemes still is not adequate to stave off the risk of repossession.
Two and half weeks on and the official Scheme guidance does not explain this change of policy. And as we understand it, this significant change has yet to be communicated to money advisors across Scotland, and for that matter to the Scottish public.
If no-one knows about this change, homeowners facing repossession could lose out. Govan Law Centre therefore reproduces the text from the Scottish Government's letter to disseminate this very useful rule change. Thanks to Jim Melvin at North Lanarkshire CABx for raising this issue.
Finally, if the Scottish Government can change Fund rules by a simple letter, GLC would hope they can revise the very low property market value eligibility limits.
Housing and Regeneration Directorate
Housing Investment Division
Mr Jim Melvin
North Lanarkshire Citizens Advice Bureau
Housing Advice Support Network
Unit 10, The Fountain Business Centre
23 June 2009
Dear Mr Melvin
Thank you for your letter of 19 May to the Minister for Housing and Communities on the relationship between entitlement to Support for Mortgage Interest and eligibility for assistance through the Home Owners' Support Fund. I am responding on behalf of the Minister.
As you may be aware, the Cabinet Secretary for Health and Wellbeing announced to Parliament on 17 June that the first review of the revised Mortgage to Rent scheme and the new Mortgage to Shared Equity scheme will take place in August. The review will look specifically at the schemes’ eligibility criteria including the relationship to UK Government schemes, such as Support for Mortgage Interest and the Homeowners’ Mortgage Support Scheme.
We continue to believe that it is right that individuals should seek help from UK Government schemes first to ensure that Scottish Government funding goes as far as possible and is the option of last resort. I can confirm however that we are willing to consider applications in exceptional circumstances where people can show that assistance from these UK schemes still is not adequate to stave off the risk of repossession. It is for this reason that we are assessing [your client’s] application to the Home Owners' Support Fund as quickly as possible.
We will write shortly to the organisations that are approved to provide independent money advice to applicants to the Mortgage to Rent and Mortgage to Shared Equity schemes to clarify the above point. We will also ensure that our scheme literature is updated following the review.
I hope this is helpful in the meantime.
Housing Investment Division Manager
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