Just a very quick query. A member of staff at the bureau said that she attended Shelter training and was told that people in negative equity could move out of there homes rent them and (1) the value of the home is ignored and (2) so is the income as it is used to pay the mortgage.

I cannot see anyway that this would work unless the property was in one of the exemptions i.e. reasonably trying to sell the home not living in

Any ideas? Or is it as i thought someone has miss understood?

Wed 04-Feb-09 01:06 PM by shawn

sounds like the Mortgage Rescue Scheme .. but not sure how your 2 questions fit with the options under the scheme - shared equity; and mortgage to rent ....

for more info see -

Mortgage Rescue Scheme from communities.gov.uk

Frequently asked questions about the Mortgage Rescue Scheme

It doesn't sound like any of the rescue schemes that I know of, either announced or under consideration.

It sounds more like someone's 'good idea'.

I tried to add but fell foul of the editing period limit, which must be about 30 seconds.


Although ....

The house would have no value as it's in negative equity.

I'm not clear about the reason the income from renting would be disregarded as it's unlikely to be treated as a business.

I would also think that given the difficulties of renting generally; void periods, maintenance, insurance etc. that I would be very cautious before advising anyone to do this.

I dont understand this bit about negative equity as that means it is worth less then you paid for it but the market value of the house is what is assesed for benefit purposes?

Surely they meant this:
- the property is NOT disregarded but, under Reg.49, IS Regs, if the mortgage or other incumbrance secured on it exceeds the current market value, then its value is nil
- because it isn't disregarded (but instead has nil value) income from it is treated as capital under Reg.48(4), IS Regs.

So it should work as long as you don't save up the income or otherwise run up against capital limits. Could have been better expressed though.

Richard Atkinson

Thanks WWR that seems to make more sense to me although it seems elaborate and surprising that this would be allowed.