Let buyers transfer mortgage debt to new home, say lobby groups

Home owners’ lobby group VEH, the NVM estate agents’ association and insurance sector body VvV have drawn up a plan which would allow people faced with negative equity on their properties to transfer the debt to their new mortgage if they move house.

Some 700,000 home owners are thought to live in properties which are worth less than the size of their mortgage.
In particular, people who bought their homes after 2001 may have negative equity because of falling house prices, the organisations say.
Tax break
At the moment, people who move home cannot deduct any debt on their old house from tax because they no longer own the property. By allowing the debt to be transferred to the new home people could escape the negative equity trap, the lobby groups say.
‘It would be relatively simple politically to allow people to claim tax relief over their negative equity as well their mortgage,’ a spokesman for VEH said in a press release.
The groups hope the plan will become part of the next government’s strategy to breathe new life into the housing market.
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