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Help for struggling home owners in Scotland

A new, improved Mortgage-to-Rent scheme helps people facing repossession to stay in their home as tenants of a social landlord.

The £35million Home Owners’ Support Fund will fund both schemes over the next two years.

Scottish Housing Minister Alex Neil urged home owners in financial difficulty to seek independent advice as soon as possible.

He said: "As part of the Scottish Government’s economic recovery plan, we have acted decisively to help home owners deal with the impact of the economic recession.

"Today sees the introduction of a new, improved Mortgage-to-Rent scheme and a new Mortgage-to-Shared-Equity scheme, providing an option for families across Scotland struggling with mortgage repayments.

"It’s important that those facing the risk of repossession seek urgent independent money advice. It may be possible, for example, to try and reach agreement with any secured lender before considering other forms of support.

"Only then can they make an informed decision about whether the Home Owners’ Support Fund is an option that suits their needs.

"We have also set up a Repossessions Group to report by 30 April on whether legislative protection for those at risk of losing their home requires further strengthening."

In her statement to the Scottish Parliament on 25 June, 2008, the Health Secretary Nicola Sturgeon announced a package of major reforms to deliver lasting improvements to Scotland’s housing system. This included the establishment of the new Home Owners’ Support Fund.

The Mortgage-to-Rent scheme has been in place since 2003 and aims to help owner occupiers who are in financial difficulty and in danger of being made homeless. The scheme helps by enabling households who are eligible to remain in their home by selling it to a social landlord – normally a local authority or housing association and becoming a tenant of that landlord.

The property is sold to a landlord and then rented back to the household. The scheme provides Government subsidies to the landlord to enable a social rent to be charged and for the property to be brought up to a decent standard of repair.

Those eligible for Mortgage-to-Shared-Equity must have at least 25% equity in their home and will retain ownership. They will enter into a shared-equity agreement with the Scottish Government, having had their secured debt reduced to a manageable level.

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