Mortgage Interest

Seen many of these DWP / Serco letters advising that any mortgage interest paid now will become a loan from April 2018 for all claimants including existing?

Was there not meant to be some sort of transitional period for existing, as these letters clearly say everyone who has SMI help now will change and become a loan from April, hard to see how 160,000 claimants can be sorted and changed to loans before April.

Transition rules are covered in regulation 19 and 20 of SI.No.725/2017. From what I can see , these provide for SMI to carry on as a benefit after 6 April and set a transition end date for some claimantsbut only to enable -

- the existing payment of SMI for a benefit week (or assessment period for UC) that straddles the 6 April date to be made; or

- the six week loan offer period to run to its end - then transition end date kicks in if offer is refused or loan agreement and documents are not received. If they are received, a further four weeks of transition is allowed; or

- where the claimant lacks capacity to make a decision, time for a decision by the relevant court / Public Guardian to be made.

There are a couple of other relevant points; one removes the 39 week qualifying period for Universal Credit where a claimant has previously been in receipt of a legacy benefit or reduces it where they were partway through a qualifying period.

An important one deals with those cases where the removal of SMI as a part of the benefit assessment would end qualification for the benefit as the needs figure falls below that of income. In these cases, claimants will be “treated as entitled” to benefits and offered loans. They will not however be entitled to any passporting on the basis of benefits entitlement, although low income rules may apply.

I’ve been modelling the effects of the 2018/2019 benefit and tax changes and, serendipitously, fallen across some odd examples.  For instance I have, by chance, hit a case where the Scottish tax changes kick someone off JSA but they would, on the above measure, still be able to get a loan.  How likely it is that an adviser would pick up on that is a different question.  The loss of SMI is quite likely to see a pile of people lose benefits entitlement, where the SMI figure was more than the difference between needs and resources, so the continuing loan entitlement may be important.