The National Audit Office has criticised the Government’s mortgage rescue scheme after it carried out less than half of its intended rescues at almost three times the expected cost for each household.
An NAO report, published last week, says the scheme has directly helped 2,600 households at a cost of £240m despite aiming to help 6,000 at a cost of £205m. The Department for Communities and Local Government spent £93,000 on average on each intervention, compared with an expected cost of £34,000.
The scheme was launched by the Labour Government in 2009 and saw housing associations work with people at imminent risk of repossession by either supplying an equity loan or buying their home at near to market rates and renting it back to them.
The report says the higher take-up of the rentback option, which is more expensive, pushed costs up but the Government took no action to reduce demand for that option until June 2010.
NAO head Amyas Morse says: “The department made assumptions about the level of demand for the scheme and made the wrong call. Spending more than expected and delivering less mean the department has not provided value for money.”
Oakhurst Financial Planning managing director Frazer Horton says: “It would have been cheaper to rent them all mansions.”