A crucial safety net for Britain's homeowners is facing the scrap heap
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The future of mortgage borrowing is not something to get you leaping out of bed in the morning, but in among the Treasury tensions there’s a crucial moment brewing in the housing market which could affect families on the lower rungs of the property ladder.
Rachel Reeves is desperate to get the housing market and the British economy moving again. After a price boom following the COVID lockdowns and the shockwaves of Liz Truss’s mini-budget, the housing market has become sluggish.
Mortgage rates are falling, which should stimulate new appetite, but houses are sitting on the market for longer, leading to asking price drops.
One in five homes available is sitting on the market for six months. Estate agents are holding more properties: the average agent has 37 homes for sale at any one time this year, rising from 32 in 2024. In other words, it’s a difficult time to sell your house.
According to reports, despite these difficulties, the Treasury is exerting pressure on the Financial Conduct Authority to rewrite or scrap the mortgage charter, which is being oddly categorised as unnecessary red tape that is holding the economy back. FCA chief executive Nikhil Rathi has confirmed that the charter is under review and feedback on it from the Chancellor and the wider Treasury is being seriously considered.
Yet the current mortgage charter was only agreed two years ago, under the Tories – not a government known for its pride in regulation. It performs an important service, giving homeowners a safety net of 12 months after defaulting on a mortgage payment before a lender can start procedures against the borrower for repossession.
This is a crucial protection against the usual vagaries of life. If you buy a house and then go on to face any number of normal obstacles – redundancy, illness, divorce – then there is a period of a year for you to rebuild your finances or make a realistic plan about your future without losing your home. If it was repealed, then that breathing space could be set by lenders to potentially as short as just three months.
This change is not only unnecessary and unfair, it is also being proposed at a time when the housing market is showing signs of stagnating and downsizing is the prime motivation for buyers. In this kind of environment, it’s hard for owners to sell up quickly and move on if facing a personal crisis to avoid losing their housing wealth. And mortgage holders hold far less wealth in property than you might think.
“Removing regulation for homeowners just as it’s rightly introduced for private renters means two hands of the state are working against each other.”
The majority of homeowners in the UK already own their home outright, making up 32 per cent of all households, with 28 per cent own with an outstanding mortgage. (By contrast, only 17 per cent were social housing tenants.) But the majority of those outright owners (62 per cent) are over the age of 65; just 2 per cent are aged between 25 and 34. As getting on the housing ladder has become more difficult, mortgages are stretching over long periods, with between 30 and 40 years now the norm for borrowers under 40. The youngest buyers are also more likely to have invested in flats and apartments, which are losing value: some who have bought over the last decade in big cities are edging towards negative equity.
Should these new homeowners encounter personal difficulties, they have very little equity to fall back on; holding on to the home may be their primary goal, as getting another chance at ownership is likely to feel impossible.
We have a housing crisis across all sectors of the market and a huge government push to build new social and affordable housing, but that will take more than a decade to bear fruit. If we see more families made homeless because the mortgage charter is repealed and rapid repossession rates rise, we will have a big problem: there is far too little capacity in our emergency housing services – social housing, temporary accommodation, hostels and other provision – to support an influx of new claims.
This isn’t only a paper concern. In 2024, around 4,400 properties were repossessed by lenders. In only the first four months of 2025, more than 2,000 homes had already been repossessed, a 42 per cent increase on the same period the previous year.
There is another issue too: paradoxically, when the Renters Reform Bill is passed into law it could also mean that private tenants emerge with more rights to remain in their own home than homeowners – a bizarre sentence to write, but where we could find ourselves if the mortgage charter is deleted and lenders are unfavourable with their terms.
Under the Renters Reform Bill, there will be a four-month notice period for tenants facing eviction due to the property being sold by the owner, no right to evict without a demonstrable reason for it (such as sale or habitation of the property) and a protection period for the first 12 months of a tenancy during which a tenant cannot be evicted.
Instability, anxiety, and a rise in repossessions are not the foundations of a solid economy. There’s little point in Reeves handing large sums of public money to the social housing sector and to development corporations to meet housing needs, or in supporting private tenants to live stable lives, if at the other end of the market, new freedoms mean homeowners start to face new and growing risks.
The entire housing market is connected, from emergency accommodation used in crisis to the most expensive private homes, bought in cash and held as assets in large personal portfolios. Removing regulation for homeowners just as it’s rightly introduced for private renters means two hands of the state are working against each other. Reeves, the Treasury and the FCA need a much more delicate hand to bring this faltering ecosystem back to life.■
About the author: Hannah Fearn is a freelance journalist specialising in social affairs. She was comment editor of The Independent for seven years, and has previously worked for The Guardian, Times Higher Education and Inside Housing. She has a special interest in inequality, poverty, housing, education and life chances.
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In that Martin Lewis was a key figure when the Mortgage Charter was created by the then Chancellor of the Exchequer, would expect that he will have something so say as to its cancellation!!!