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This report examines the current state of the safety net for home owners who get into difficulty. It also highlights the current uncertainties regarding government policy in this area. the report sets out some options for the future that government might consider.

Mortgage arrears and possessions have not risen to the levels suffered in the last housing market downturn – mainly due to the sharp fall in interest rates, and temporary industry and Government support measures – but with the downturn continuing they are forecast to rise substantially. 

Mortgage arrears are a systemic feature of home-ownership. Events beyond the control of the households concerned – e.g. loss of income due to unemployment, ill-health or household break-ups – cannot be eradicated by a more prudent mortgage lending regime. 

The current UK safety net for home-buyers is patchy, and is set to be weakened further under Universal Credit and with a further decline in the take-up of mortgage payment protection insurance because of new rules governing the sales process. Voluntary take-up had already declined before the downturn so there can be no credible return to the prior policy of relying on this. 

The study highlights two key options for providing a more effective safety net while balancing out risks, responsibilities, roles and costs. The most effective would be a compulsory new partnership, similar to the Sustainable Home Ownership Partnership (SHOP) scheme. The scope and costs of the scheme could be modified by making longer-term benefit payments a charge on the borrowers' homes. 

A second option would be a new partnership structure based around continued forbearance, an auto-enrolled private insurance system and a state-backed payment system, with longer-term costs being charged to homes.

The full report and summary are available on the JRF website:

Building an Effective Safety Net for Home Owners and the Housing Market


Steve Wilcox

Peter Williams

Publication Date

30th June 2013