Examination of Witnesses (Questions 429-439)|
WEDNESDAY 5 DECEMBER 2001
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?
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
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. Unlessand
we are still talking about this to some extentthe 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
(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.
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