Scottish Labour unveils mortgage rescue package amid cost-of-living crisis

Scottish Labour has unveiled a “mortgage rescue package” to help those at risk of losing their homes amid the cost of living crisis.

It is calling for a relaunch and revamp of the Scottish Mortgage to Shared Equity scheme, through which the Scottish Government takes a temporary equity share in people’s homes to help reduce payments.

The party said that the Mortgage to Shared Equity Scheme has not had a single successful applicant since 2015/16.

It proposes widening the eligibility of the initiative by amending the eligible house price thresholds so that it is not only the lowest value homes that qualify, and reducing the size of the equity that people need to have in their property.

Scottish Labour leader Anas Sarwar said it is important to increase support amid the “storm that many families are facing right now” amid inflation and rising interest rates.

He told the PA news agency: “What we’re unveiled today is a mortgage rescue plan because right across the country we’re in the midst of a cost of living crisis where people are seeing energy prices go up, seeing their petrol prices go up, food prices go up and now they’re also seeing their mortgages go up as a result of the incompetence of this Tory Government.

“People are now paying a Tory premium on their mortgages and what we want to avoid is people’s arrears increasing, repossessions increasing or even the risk of people losing their home and all the risk that comes around homelessness from that.

“And that’s why this is a sensible measure which supports people through this difficult period to give them support with their mortgage so people can protect and save their homes.

“We led the debate when it came to the windfall tax across the UK, we led the debate when it came to a rent freeze and a ban on winter evictions for those that were tenants but we also recognise that homeowners are feeling pressure right now as well and we’ve got to support those people in the midst of this cost-of-living crisis.”

Scottish Labour propose that, to account for the widening of the scheme, £50 million is budgeted next year, with an assessment of uptake and economic forecast for future financial years.

It said that in the first instance, this funding should be allocated from within the wider housing budget.

Mr Sarwar said: “A scheme like this already exists in Government but it’s not being used in a meaningful way for the last five or six years.

“I think that is a waste of resource, instead there’s around £20 million in the housing budget that can be used right now.

“We think that this would cost a maximum of £50 million so we should use the money that’s already existing in that pot and if we do need to go above that £20 million towards that £50 million there is a surplus in the Scottish National investment bank of hundreds of millions of pounds that has not been used and has not been spent.

“We can look to use that capital money to make sure we’re taking an equity stake in these homes in order to protect people’s mortgages so they don’t lose their home.”

A Scottish Government spokesperson said: “We know many homeowners are struggling with rising interest rates. Our Home Owners Support Fund is the only such scheme in the UK, offering support to those on low incomes who are at risk of falling behind on their mortgages and facing repossession or eviction.

“The fund, which includes the mortgage to shared equity scheme, sits alongside other advice services and legal aid support. We are currently reviewing the fund, including eligibility rules.”

The spokesperson continued: “Applicants apply to the overall home owners support fund programme and we assess all applications to determine suitability for either mortgage to shared equity or mortgage to rent. Every application is carefully considered and we identify the option that is most suitable for the applicant for their circumstances.

“The Scottish Government recognises the growing pressures on household budgets and has allocated almost £3 billion in this financial year that will help mitigate the increased cost of living.”

A UK Government spokesperson said: “There are a range of factors affecting mortgage and interest rates, which have been rising internationally in response to global trends including Putin’s illegal invasion of Ukraine.

“The Government has taken immediate action to ensure the UK’s economic stability and demonstrate its commitment to fiscal discipline – in order to provide stability for markets, including mortgages.

“FCA rules require firms to deal fairly with customers in payment difficulties.

“More widely, the Energy Price Guarantee will save the typical household around £700 this winter, based on what energy prices would have been under the current price cap – reducing bills by roughly a third, and are providing payments of £1,200 to the eight million most vulnerable families.”