No extra funding for Mortgage to Rent Scheme in Scotland

The Co-ordinator of the Scottish Government's Home Owner Support Fund (HOSF) has confirmed that there will be no additional funding to the scheme to cope with the expected increase in demand following the Department of Works and Pensions cut in mortgage interest payments to unemployed homeowners.  Since earlier this month the amount of mortgage interest paid dropped from 6.08% p.a. to the Bank of England’s average monthly mortgage rate, which is currently 3.63% p.a.

GLC had cited an example of a Govan client who had received DWP interest of £742 p.m to her capital and interest mortgage, resulting in a shortfall of £376 p.m. Her family were prepared to make up that shortfall and the court action would be continued on that basis, giving her time to try and get back into work. However, due to the UK Government’s change of policy, this month the DWP reduced her ISMI to £433 p.m, resulting in a 80% increase in her shortfall to £678 p.m. She could not pay this (she received £59.49 IBJSA), nor could her family do so.

HOSF Co-ordinator Keith McDowell's said:
"Thank you for your email of 4 October to Alex Neil MSP, the Minister for Housing and Communities about the Scottish Government’s Home Owners’ Support Fund which has been passed to me for reply.

The Scottish Government is aware that people who find themselves in danger of losing their homes may still be at risk, even having successfully applied for other forms of assistance available to them. As a result, in June 2010 we reviewed the administrative procedures, application form and information leaflet to make it clear to applicants and advisers that if other forms assistance (such as Support for Mortgage Interest) do not remove the threat of repossession, applicants may still apply for assistance from the Home Owners’ Support Fund. The amended scheme literature is published on the Scottish Government website at www.scotland.gov.uk/hosf

In 2009/10 the Scottish Government helped 303 households remain in their home as a result of the Mortgage to Rent scheme with record funding of £20m. I am pleased to say that the budget for 2010/11 has remained at £20m and we aim to help similar numbers again".

No extra funding for Mortgage to Rent Scheme in Scotland

Human Rights in Divided Britain

The erosion of civil liberties, and the need to use the law more creatively and effectively to tackle social injustice and the forthcoming 'austerity agenda', were just some of the topics discussed during a barnstorming debate last night at the University of Cumbria, marking the 20th anniversary of the successful and forward-looking Cumbria Law Centre.

The public debate posed the question of whether the 1998 Human Rights Act was essential or a distraction in the struggle for social justice in Britain.  Former chair of the UK Law Centres Federation, and director of Kent University Law Clinic - the UK's oldest university law clinic - Professor John Fitzpatrick gave an inspirational speech on the erosion of civil liberty and freedom in the UK.

Professor Fitzpatrick highlighted the UCL Student Human Rights Programme's report, 'The Abolition of Freedom Act' (opens as PDF) which surveys the 25 Acts and 50 measures in recent years which have eroded our freedom, liberty and rights as citizens of the UK.  After considering the incredible struggle and loss suffered to secure our freedoms and liberty, Professor Fitzpatrick contrasted the heady days of 1966, with landmark cases such as Miranda v. Arizona and closer to home, Rice v. Connolly. In the pursuit of being protected by the State, had we ceded our freedom? If so, why had we allowed this to happen?

GLC's Mike Dailly suggested that there had never been a more important time in the post-war period to have a human rights framework incorporated into our domestic law. He argued that the role of law centres in the UK had never been more needed, as it would fall to solicitors and advisors to challenge the worst injustices thrown up by the Coalition Government’s austerity agenda. The Human Rights Act represented a vital tool in the tough struggle for social justice.  Mike argued that we needed more law centres in the UK, not less. Citizens needed a greater understanding, and empowerment, as regards their rights, with access to real remedies, and appropriate advice and representation.  Mike's speech is available online here.

Human Rights in Divided Britain

Urgent action required to prevent repossessions following DWP mortgage cuts

GLC has written to Scotland's Housing Minister, Alex Neil MSP, requesting that the Scottish Government consider changing and clarifying the Mortgage to Rent Scheme rules, and provide additional resources to the Scheme, in order to counter the impact of the UK Government's cuts to mortgage interest payments, payable to unemployed homeowners in Scotland.  Our letter is set out below.

"Dear Minister

As you will be aware this month the Department of Works and Pensions (DWP) implemented the Coalition Government’s reduction in ISMI for unemployed homeowners, resulting in a reduction in the amount of interest paid from 6.08% p.a. to the Bank of England’s average monthly mortgage rate, which is currently 3.63% p.a.

While the Scottish Parliament and Scottish Government are to be congratulated in strengthening the rights of homeowners in Scotland, with the coming into force this month of the Home Owner and Debtor Protection (Scotland) Act 2010, it goes without saying that this Act provides homeowners with a procedural opportunity to find a sustainable solution to mortgage arrears, as opposed to providing the solution per se.

Sustainable solutions have frequently included giving someone enough time to get back into work, and/or enough time to repay arrears and meet their ongoing monthly mortgage. But the new reduced rate of ISMI now cuts across the ability of out-of-work Scots to maintain an even keel while they sort out their financial position; and this will have profound implications for the role of the Scottish Government’s Home Owner Support Fund (HOSF), and in particular the Mortgage to Rent Scheme (MtRS).

To give a typical example. Our client is a lone parent who had lost her job. She has a young dependent child. The DWP were paying £742 p.m to her capital and interest mortgage, resulting in a shortfall of £376 p.m. Her family were prepared to make up that shortfall and the court action would be continued on that basis, giving her time to try and get back into work. Due to the UK Government’s policy, this month the DWP reduced her ISMI to £433 p.m, resulting in a 80% increase in her shortfall to £678 p.m. Suffice it to say, she cannot pay this (she received £59.49 IBJSA), nor can her family do so.

As you know, the Scottish Government’s MtRS was changed on 16 March 2009, with a number of additional qualifying hurdles being introduced, including the expectation that where applicants were eligible for ISMI they would generally be expected to use that as a short term solution, as opposed to MtRS. Clearly, the DWP ISMI change drives a horse and carriage through that policy, even for unemployed Scottish homeowners with interest rates slightly above the Bank of England’s average rate (i.e. in the example case cited, the rate of interest is 6% p.a. which is not uncommon, and is a prime lender rate from a High Street bank).

Govan Law Centre is very concerned with the impact of the DWP ISMI changes in Scotland. We appreciate this is a Westminster issue, but clearly the Scottish Government has the power to lessen the impact of this regressive policy change through the HOSF. Accordingly, we would be grateful if you could advise whether:

(a) The Scottish Government would be willing to urgently revise the HOSF scheme rules (and application forms) to make it expressly clear that unemployed Scottish homeowners on ISMI at a rate above the Bank of England’s average rate will not be excluded from applying for help due to their ISMI eligibility?; and

(b) In the example case given, our client will now be applying to the HOSF for access to the MtRS, whereas had the DWP changes not occurred she would not have had to do so. There will be many Scottish households facing repossession who will now face this Hobson’s choice. This may well place a significant additional demand on the HOSF. Is the Scottish Government willing to meet this demand by increasing the level of funding available to the HOSF, so that the Scottish households affected by the DWP ISMI changes are not excluded from assistance?

(It will be noted, that in the example given, our client cannot even afford to sell her home, due to the prohibitive cost of a Scottish Home Report, and therefore she is placed in an extremely vulnerable position as regards a short to medium term solution in relation to her financial predicament)".

Urgent action required to prevent repossessions following DWP mortgage cuts