Blair offers mortgage help to middle-class

TONY BLAIR, the Labour leader, will call this week for a revolution in the housing market to tackle middle-class insecurity and stem the tide of home repossessions.

Mr Blair will ask for more flexible "lifestyle" mortgage arrangements, allowing for payment holidays if home-owners' incomes decline.

Although such packages already exist, Labour believes that the financial markets have been slow to adapt to the change in work patterns. In particular lenders would be pressurised by a Labour government into helping the rising number of people who work as freelances or on short-term contracts.

The Labour leader will also pioneer the idea of a "staircase" between owning and renting. This would allow tenants to buy their properties, and permit home-owners who fall on hard times to reduce their financial commitments by returning to renting.

No legislation is planned, although sources say that a Labour government would be in a position to put pressure on lenders to offer flexible arrangements.

In his speech to a special Labour conference on housing in London, Mr Blair will also outline plans to protect holders of mortgages from receiving poor advice.

The Opposition says that there is now a "strong case" for bringing the lenders under the scope of the 1986 Financial Services Act.

That means that banks and building societies would be obliged to offer the best possible financial advice and borrowers would have recourse to the courts if it proved otherwise. Such protection currently applies to those who are, for example, given faulty advice on pensions.

Labour also plans to ensure that the lenders provide all the necessary information, including charges and commission.

Mr Blair will argue that home-owners, who put their faith in the Conservatives at the last election, have been abandoned by John Major's government. He will argue that there has been one household repossession for every two minutes of every working day since Mr Major moved into Downing Street.

The Opposition believes that banks and building societies have been over- zealous in their repossessions. Although Labour accepts that some repossessions are inevitable, they should only be the last resort, it says.

The "overhang" of repossessed properties has acted as a dead weight and depressed the market, the party adds.

The Opposition has also focused on negative equity, which now affects one million home-owners. This has also helped to stifle any real growth in the housing market - although the Conservatives argue that the average figure is low. Labour sees the insecurity of the middle classes as a key to the outcome of the next general election.