Law Society warns on shared equity rescue scheme

| September 3, 2008 | 0 Comments
Law Society warns on shared equity rescue scheme

Government proposals to kick-start the housing market have prompted a warning from the Law Society.

The measures announced this week include help for families who are struggling with their mortgage repayments.

Those facing repossession may be eligible for a shared equity or shared ownership scheme, which would allow people to remain in their homes by selling part of their property and renting it back.

However, Law Society members are concerned that homeowners opting for the scheme could lose out because if the market picks up, they will own a smaller proportion of the equity in their property.

The society’s president, Paul Marsh, has called the solution short-term and one that could leave many homeowners on lower incomes trapped.

He points out that such an arrangement means that proceeds of a sale of the property would be reduced, so that if a homeowner has a 50% share, they will only receive 50% of the value.

The Law Society is concerned that homeowners in difficulties will enter into equity share without being fully aware of the dangers and urges anyone considering the scheme to take legal advice, plus advice on alternative ways in which they might solve their problems.

Turning to the concession on stamp duty, which has been suspended on properties sold for £175,000 or below for one year, the Law Society has welcomed the move but fears it might be too little, too late.

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