HL Deb 15 March 1995 vol 562 cc847-9

2.52 p.m.

Lord Blyth asked Her Majesty's Government:

What plans they have to enable residents of high-rise buildings previously owned by local councils to obtain mortgages more easily.

The Minister of State, Department of the Environment (Viscount Ullswater)

My Lords, there is no reason why mortgage lenders should treat residents of high-rise ex-council dwellings differently from any other applicant for a mortgage. However, it is true that some prospective purchasers of ex-council flats are having difficulty obtaining a mortgage where lenders are reluctant to advance loans on such properties until a resale market has become fully established. My right honourable friend hopes shortly to approve a more flexible form of mortgage indemnity agreement which local authorities will be able to use to encourage mortgage lending in such areas and help speed up the development of a healthy resale market.

Lord Blyth

My Lords, I thank the noble Viscount for that helpful reply, but does he realise that it is a little difficult at the lower end of the market? Is he aware that it is not just the obtaining of mortgages which is difficult but also estate agents are reluctant to take this type of property on their books? Will his right honourable friend continue to work on the problem and, we hope, improve the position, as he said?

Viscount Ullswater

Yes, my Lords, I understand the problem identified by the noble Lord. The purpose of the mortgage indemnity agreement is to act as a comfort to the lender to secure a mortgage for the prospective purchaser.

Lord Molloy

My Lords, is the Minister aware that there are millions of ordinary British families who live in rented property but who have the laudable desire to own a home of their own? Following the encouraging reply which the Minister has given, would it not now be possible for the Government, the noble Viscount's department, the bankers and all the other folk involved to take note of this laudable desire of very many ordinary people and do their best to assist them to achieve that end?

Viscount Ullswater

My Lords, I welcome the noble Lord's question and I shall put the problem in context. Local authorities have sold over 169,000 flats since 1979. A recent survey of leaseholders by Bristol University found that the vast majority were pleased with their flats.

Lord Dean of Beswick

My Lords, is the Minister aware that the slowness in disposing of council-owned property not only concerns flats? Is he also aware that anyone who has bought a council house and places it on the market has an almost nil chance of selling it? Is he aware too that there have been demonstrations in London by people living in flats which they are unable to sell under any conditions, as nobody wants former council flats?

Viscount Ullswater

My Lords, it is an indictment of the construction of the flats in the first place and we have to be worried about that. As the noble Lord identified, currently a great many people are living in those flats, whether they own them or are tenants. As the noble Lord, Lord Molloy, indicated, the option of purchasing a home is something which a great many people have in mind.

Lord Stoddart of Swindon

My Lords, the Minister takes great pride in local authorities having sold so many houses. Will he now allow local authorities to use all the proceeds of the sales to relieve the housing shortages in their areas?

Viscount Ullswater

My Lords, that is a completely different question to the one on the Order Paper.

Lord Williams of Elvel

My Lords, does the noble Viscount recall that in the leasehold reform Act, which I know the Chief Whip will recall, the Government introduced a scheme called Rent to Mortgages? Is the noble Viscount aware that the Government have spent approximately £400,000 advertising the scheme and that the take-up so far is five? Given the failure of the scheme, does the Minister agree that it is now right that the Government should go into reverse and help people out by going back to a Mortgages to Rent scheme?

Viscount Ullswater

My Lords, that is a consideration which is presently being thought about. The difficulty is that a great many people living in these flats want to sell them because they want to move. They then do not want to become tenants of the local authority.