MORTGAGE REPOSSESSIONS (Hansard, 30 April 1996)

§ Mr. Raynsford
I beg to move, That the clause be read a Second time.
New clause 7 deals with mortgage repossessions, which are a serious cause for concern throughout the country. Approximately 1, 000 people a week lose their homes through repossessions. More than 300, 000 households have suffered that fate over the past six years. That is a human disaster for all those families. They have suffered the grief and anguish of repossession, but it has also had a damaging impact on the housing market. The market has received a constant flood of repossessed properties at a time when there is little confidence in the private market.
It is right to consider the need to do more to tackle the problem of repossessions, both to help people at risk of repossession and to ensure that there are measures to help to restore confidence in the market. New clause 7 is designed to build on the recent court judgment that established the principle that a mortgagor should be given a proper opportunity—a reasonable period—to repay debts due under the mortgage. It would give statutory effect to that court judgment to assist in the development of good practice by lenders so that they explore all reasonable alternatives to repossession. Several initiatives have already been taken, including options for shared ownership schemes. The measure would be a further weapon in the armoury to try to reduce the unacceptable toll of human casualties caused by repossession. I hope that the Minister will respond sympathetically to this initiative to help those victims.

§ Mr. Clappison
I understand the hon. Gentleman's point. If he carefully studies the Court of Appeal case to 1044 which he referred, he will find that it makes his amendment unnecessary. The amendment would create a presumption, but that recent case provides strong authority for the proposition that judges should take, as the starting point for determining what constitutes a reasonable period for repayment of arrears outstanding on a mortgage, the remaining term of the mortgage.

§ Mr. Simon Hughes
I support the new clause, as does my hon. Friend the Member for Christchurch (Mrs. Maddock), and I hear what the Minister says. The important thing is that we get into the heads of the building societies, the lenders and those with a financial interest the fact that they must, as a duty, consider alternative ways of re-financing. There are some good schemes—Rowntree has one in York which I have visited and there are others—that allow people to staircase up and down and move from up to 90 per cent. ownership down to 10 per cent., if financial circumstances require. If people are given half a chance, as the Minister and the Department know well, there are often ways in which they can reorganise their finances. The Bill must deal with unemployment and temporary financial difficulties. If what the Minister says is right, all courts should follow that authority unless it is overturned. There is a risk that it would be overturned.

§ Mr. Clappison
indicated dissent.

§ Mr. Hughes
I accept that it is only a slight risk—if the matter went to the House of Lords. The Minister has an obligation not just to rely on the Court of Appeal current judgment but to ensure that the Department always makes it clear to building societies that the principle most recently enunciated in that judgment is the one that they should follow. He should ensure that the courts understand that and, above all, that purchasers understand it. There should be a trigger whereby, if people run into financial difficulty, they will go into a process of renegotiating their mortgage and will not suddenly be at risk of being turfed out of their home, which might be the most secure place for them and for the investment, for both parties in the proceedings.

§ Mr. Nicholas Winterton (Macclesfield)
Am I not right in thinking that the Council of Mortgage Lenders and the Building Societies Association have issued a consultative document on a code of practice? Surely that very much meets the concern expressed by the hon. Member for Greenwich (Mr. Raynsford). Am I not also right in believing—I say this with some pride and satisfaction, as I have campaigned consistently about the housing market for the past two years—that, for the past three or four months, the number of people in negative equity has dropped dramatically and is now well below 1 million, having been up to perhaps 1.4 million?

§ Mr. Clappison
My hon. Friend is right on both points. Guidance has been issued and negative equity is, fortunately, declining.

§ Mr. Raynsford
In response to the hon. Member for Macclesfield (Mr. Winterton), our argument is not with the Council of Mortgage Lenders, which has issued guidance, but with the Government, who have presided over the worst catastrophe of repossessions that the 1045 country has known—a Government who have watched 1,000 people lose their homes through repossession every week and who have done nothing in the Housing Bill to tackle the problem of repossessions. That is why we raised that issue tonight and why we will continue to campaign—not just on that but on many other issues—for measures to assist home owners in difficulty, to give them help and a prospect of getting out of their difficulty.
I do not intend to press the new clause further tonight, but I give notice that the Labour party will return to the issue between now and the general election. The Government will pay a heavy price for all those people who have suffered repossession in the past six years. I beg to ask leave to withdraw the motion.