Select Committee on Transport, Local Government and the Regions Minutes of Evidence

Examination of Witnesses (Questions 429-439)




  429. Can I welcome you both to the third session this morning. Could I ask you to identify yourselves for the record.
  (Mr Osborne) I am Bob Osborne, representing the Urban Regeneration Officers Group.
  (Mr Brown) I am Chris Brown, the Chair of the Royal Institution of Chartered Surveyors' Regeneration Policy Panel.

  Chairman: Do either of you want to say anything by way of introduction or are you happy to go straight to questions. Right. Bill O'Brien?

Mr O'Brien

  430. Mr Osborne, in your evidence you quote a hypothetical case of Mrs Smith of Brown Street. What is the cost of moving Mrs Smith from her obsolete home into the swap home, and how should the costs be borne and shared in that transfer?
  (Mr Osborne) The basic concept is that the cost of the move would be a regeneration cost funded either from Housing Investment Programme finance from the local authority or Single Regeneration budget financed by the North West Development Agency or New Deal for the Communities. The cost that the home owner bears is the risk of moving during a period after the move, the idea of the concept being to sustain the neighbourhood in which the person is living and if that person moves any time, say, up to five years before the move, they would bear the costs or some of those costs, but the price of regeneration is to try to sustain that community, and the basic concept is that it is borne by public money.

  431. There is a mortgage on this property and the amount of money offered does not meet the outstanding mortgage, so should the mortgage lenders come into play?
  (Mr Osborne) We have had long and detailed discussions with the mortgage lenders over this. It took a lot of time and a lot of effort to convince them to use this model. Unless—and we are still talking about this to some extent—the local authority underwrites the mortgage, they are not willing to get involved in changing the arrangement with the existing customer so the mortgage as it stands is lifted up and carried to the new home and there is no change in relationship.

  432. What we are saying is that the mortgage lenders, who only get £8,000 as opposed to £14,000, are not losing anything?
  (Mr Osborne) In essence, no.

  433. On the question of the Home Swap there is this issue of the person accepting the new home in another area but there is a term and condition attached to it. You refer to five years, I think. Is five years the length of term that is accepted? Why should the five years be in there?
  (Mr Osborne) We are basing it on the rules used for renovation grants at the moment where if you get a renovation grant and move before the five-year period is up, you have to pay the renovation grant back at a discounted value. We felt that was an equitable method we could use. We have applied it to this method. We are still testing it out in the borough I work in and by the summer we should know whether that method works or not, so that is the first stab at it. If it does not work, clearly we would have to look at something different.

  434. But Mrs Smith who is nearly 60 may not wish to live there all that time because of changing circumstances or because of changes in the neighbourhood. Would it be fair to her to say, "You have got to stay there five years or else you will lose by it"?
  (Mr Osborne) That is part of the price of her going into the deal.

  435. She has no alternative, she is living in a house which is the only house in the neighbourhood, the council is going to clear it, and this is the alternative, so she has not got a decision on this.
  (Mr Osborne) She could choose to go into some other form of accommodation.

  436. She loses because of the mortgage.
  (Mr Osborne) Yes.

  437. What we are looking for is fairness and you are saying that the alternative for Mrs Smith is to accept what the council offer and that is the end of it?
  (Mr Osborne) I think in this particular case there is a range of options open to this person who could be re-housed into sheltered housing or she might want some form of equity sharing arrangement in her own home. The nature of the collapse of the market is, I am afraid, that everybody loses out. We feel this method is the fairest under very poor circumstances.


  438. Has she not been totally misled? Basically in that area Salford Council 10 or 15 years ago persuaded people in those houses that it was going to be a renewal area, a lot of money was going to be spent on the properties, "Please stay, we will make your houses really attractive." That all failed. She has been caught there probably for the last seven or eight years wishing to sell and unable to sell. Now she has been offered the chance to move across the road into a bit of the area which you hope you can protect and save, and she is then going to be trapped there again for at least five years, if not longer?
  (Mr Osborne) I suppose the answer to that is what are our alternatives? She could be re-housed in housing association or council accommodation, but she would still be in the same parless state she is in in terms of negative equity.

Mr O'Brien

  439. But she would be responsible for the mortgage? That does not help the record to just put your hands up.
  (Mr Osborne) Yes, she is still responsible for the mortgage.

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