‘Loan Finance To Improve Housing Conditions For Vulnerable Owner Occupiers’, commissioned by the Department for Communities and Local Government, also said interest-free secured loans and equity release products were the most plausible methods for supplying finance to those on low monthly incomes.
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A key recommendation for achieving this was the creation of a pool of capital, provided by private funding, which the government would offset interest and premium costs.
The report stated: ‘Recent house price growth, even in low demand areas, has opened up a new equity release market in particular, at least in the short term while Regional Housing Board funds are available. However, the household survey suggests that vulnerable owner-occupiers are unlikely to choose to take out a loan and that they would ideally save up money and pay cash for what they need.”
The report said that making such funding available to those on lower incomes would stop people going to loan sharks or other poor financial options and help them pay for a good quality of repair work.
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However, Bob Sturges, director of communications at Money Partners, said: “This scheme would have limited appeal to lenders as lending to lower income families presents risks. I would also question the definition of ‘lower income family’and why one group should get preferential treatment.
“A lot of the schemes launched by this government have been tinkering around the edges without tackling some of the major problems within the market which would make a lot more difference, such as stamp duty and inheritance tax.”
