Struggling homeowners in London should be able to ‘change tenure’

The Mayor of London, Sadiq Khan, has come up with a bonkers idea to deal with hundreds of thousands of London homeowners who are at risk of a mortgage ‘bomb’ next year.

He says that the cost-of-living crisis is putting more pressure on households that are already struggling to pay their mortgages.

And to resolve that problem, Mr Khan says that homeowners should be able to switch their housing tenure to shared equity or affordable renting so they can remain in their homes.

He also says the government should bring in mortgage payment holidays and reverse the cuts that supported mortgage interest via the social security system.

‘Homeowners already face sizable monthly mortgage payments’

Mr Khan said: “Many London homeowners already face sizable monthly mortgage payments alongside rising costs and put simply, they are struggling to cope.

“Hundreds of thousands more London households will see their mortgages skyrocket this year and next, with those on lower incomes at greatest risk of defaulting on their mortgage payments, getting into debt, or losing their homes.”

He added: “The Government have so far failed to recognise the scale of the crisis – I’m calling on Ministers to take urgent steps to protect London’s homeowners from the devastating impacts of high mortgage rates.”

London households have seen their mortgage rates

The mayor’s analysis, based on data from the Financial Conduct Authority, shows that 384,000 London households have seen their mortgage rates increase since the Government’s mini-Budget last year.

These include those who have variable rate mortgages or who have switched from fixed rates since October last year.

The Institute for Fiscal Studies estimates that the extra cost for these households is about £520 a month, adding up to a total ‘mortgage bomb’ of £2.4bn a year for London so far.

There are 209,000 London households facing higher mortgage payments in the next year as their fixed rate deals expire.

Homeowners say they will have difficulty meeting their payments

A poll for City Hall also reveals that more than a third (34%) of London’s mortgaged homeowners say they will have difficulty meeting their payments in the next six months, up from 21% in January.

The mayor has warned the Government that high mortgage rates are affecting lower-income Londoners’ ability to keep up with their payments and make ends meet.

He said that more families would be pushed to the edge of financial ruin and the government must intervene to prevent a wave of repossessions.