§ Mr. Durantasked the Secretary of State for the Environment what steps have been taken to give effect to new mortgage guarantee powers of local authorities and the Housing Corporation under the Housing Act 1980.
§ Mr. StanleySection 111 of the Housing Act 1980 gives local councils and the Housing Corporation a new power to enter into agreements to indemnify building societies against losses arising from a mortgagor's default.
I am pleased to say that model forms of indemnity now drafted are acceptable to representatives of the Building Societies and the local authority association. A circular to local authorities approving these forms will be issued shortly.
Use of the indemnities will complement the existing work of local authorities and building societies in financing house purchase at the lower end of the market, by enabling building societies to increase their lending to those with modest incomes. There will be no charge to public expenditure except where indemnities are called on. Local authorities will have a wide choice of circumstances in which to offer indemnities, including mortgages for the purchase of newly built starter homes, houses in need of 339W improvement in both the public and private sectors, and houses sold under the right-to-buy, improvement for sale, homesteading and shared ownership schemes.