The Mortgage Rescue Scheme, launched in January 2009 by the Department for Communities and Local Government, in two years achieved fewer than half of the rescues expected. The NAO has reported that the Department directly helped 2,600 households avoid repossession and homelessness at a cost of in excess of £240 million - but it originally expected to help 6,000 households for £205 million.
The scheme allows not for profit housing associations to purchase a stake or all of a home and allow the residents to continue living there by renting it back to them.
Commenting, Margaret Hodge, chair of the Public Accounts Committee, said: “The scheme has helped fewer than half the number of households expected and each rescue has cost more than three times as much as expected, with overall costs sitting at £240m.
"Spending £35m more than planned yet not reaching all those in need does not represent value for money for taxpayers' investment in this scheme.”
The Labour government launched the scheme in 2008 following a surge in the number of homes being repossessed due to people unable to keep up mortgage payments.
The NAO has studied the success of the scheme in England and found that the Department for Communities and Local Government failed to predict accurately the number of people who would choose to relinquish ownership of their home versus the number of people who would opt to share ownership with the housing association.
Some 98.5% of those on the scheme chose to sell their home, whereas the original estimate was that only 15% of people on the scheme would do so.
Amyas Morse, head of the National Audit Office, said: “The department made assumptions about the level of demand for the Mortgage Rescue Scheme and made the wrong call.
“There was more need than expected for more expensive support and less for the relatively low-cost rescue option. Spending more than expected and delivering less means that the department has not provided value for money.”
