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Benefits to bricks
This is very vague by the prime Minister.
Has anyone mentioned a timetable for more detail?
has anyone told him that it was the Tories who stopped you getting money towards your mortgage in means tested benefits?
As with all such pronouncements, we are dogged by lack of detail - an intended feature, not an accident - and this ‘policy’ will probably crawl away to die with all the other headline-grabbers that have been tossed carelessly into the air.
Even if some plan of this sort took off, I am reminded of my very early years as an adviser, when people who had exercised RTB came in demanding to know why ‘the council’ was refusing to do repairs to their homes like they had always done. Some looked shaken to the core when told that they were home owners now and had to fund their own repairs. ‘Someone’ had neglected to mention that little thing….
How can people on benefit-level incomes service both a mortgage and other costs arising from home ownership?
A torrent of repossessions followed, last time.
Just been listening to Dr Coffey on the radio. She talks about ending lining the pockets of rich landlords! But I thought the right to buy was from social landlords?
And how could HB for working families transfer into UC support with SMI (changing 9 months wait to 3 months) where one wage payment from work strikes out any SMI altogether?
Dr Coffey has gone on to talk about disregarding Lifetime ISA savings designated for mortgage deposits - well that’s alright then!
Andy isn’t quite a lot of HB now being paid to private landlords who are the owners of properties that used to be council properties?. If they hadn’t been sold off the HB would still be being paid at the level of social rent and the HB bill would be lower.
Yay, let’s start another sub-prime lending crisis and bring the banking system to it’s knees again!!!
Absolute dog’s dinner of a policy that will wither away and die like Andrew says.
Andy isn’t quite a lot of HB now being paid to private landlords who are the owners of properties that used to be council properties?. If they hadn’t been sold off the HB would still be being paid at the level of social rent and the HB bill would be lower.
A couple of years ago I had two clients in the same building - one was our tenant, the other was renting from a private landlord who’d exercised his right to buy. They were both three bedroom flats. Our tenant’s rent worked out as £402.52 per month and was covered in full by HB, but the other client’s rent was £925 per month and only about £830 of it was covered by HB. But as well as costing more than twice as much in HB, the private tenant and her children had to put up with some really terrible (and dangerous) disrepair.
To channel John Crace; the Tory party is going to be really furious with the Tory party when they realise what the Tory party has done to take away housing costs support from homeowners.
But isn’t it a familiar strategy: sell off state assets that the people have built up over years, to make the finances look better in the short term, and let the people of the future pick up the bill.
I’ll see your £925 and raise it to £3400.
True story: 3B flat in block on post-war estate in West London with a certain notoriety for crime and squalor. Rent charged to council tenants: £90 a week at the time. Events occurred just before LHA upper limits were introduced in 2011.
This flat had been bought by its original Council tenant a few years previously. She had waited for the RTB discount penalty period to expire then sold it to a BTL landlord. That landlord then leased it to the Council to use as temp acc for homeless families, at £500 a week which was the HB subsidy limit for temp acc. So the Council is paying £500 a week of public money to a private landlord to use one of the flats in its own block.
But that’s only the introduction. This landlord has been observing London LHA rates going bonkers since the 2008 launch of the LHA scheme. The Council’s lease on the flat expires in 2010 and the landlord decides to offer the place to private tenants on HB because the LHA rate for 3B accommodation is, wait for it, £725 a week. So an HB claimant moves in and gets £725 a week for a flat which would be £90 a week for a council tenant.
Then in March 2011, just before the LHA caps come in, she turns up in reception and says she wants to cancel her HB claim. Certainly madam, can we help you with anything else? OK, have a lovely rest of your day.
One week later: she’s back, with a new tenancy and a new HB claim. Same gaff, but now £790 a week because the LHA rate has crept up to £790. By claiming £790 a week HB in March 2011, she will prolong her entitlement to that LHA rate for almost two years under the transitional arrangements that applied when the caps were brought in. Otherwise, the LHA cap would have been £340 a week, which is still preposterous but, I mean, £790!!!
That, folks, is how you end up with market rents that no-one can afford - a situation that defies every law of economics.
About 15 years ago I had a large underpayment of tax credits, paid following a long dispute.
I used this to start my house deposit fund. I was finally in a position to get a Halifax mortgage on sole income in 2014 - due to ex’s bad credit and being in and out of work. For much of this period I was getting a combination of HB/ TC and practising living below my means. I bought at the very top price I was able to “afford”/ raise and at no point since could I have afforded the house I now own.
2015 I had to stop paid work. To start this was a struggle and I accrued £4k credit card debt - but once I had maximised benefits including daughter’s DLA I was able to overpay and switch to a lower interest rate. I did get SMI but as we know this became a loan.
2021 I returned to paid work. I have now paid 50% of the original mortgage debt.
I imagine I am a massive outlier having bought a house mainly with tax credits money back in 2014 and paid the mortgage down. I benefited from being extremely organised with money but, crucially, from
1. House prices at a lower base - the “value” of my house has gone up from 95k to 170k
2. Tax credits being more generous than UC
3. Legacy benefits being more generous than UC
The moral of the story is this is literally impossible today.
That, folks, is how you end up with market rents that no-one can afford - a situation that defies every law of economics.
What about the following laws of economics?
1. The rich get richer.
2. The poor get poorer.
3. Greed is good.
It says this in touchbase:
Plans include several measures to be delivered by DWP as follows:
• Local Housing Allowance (LHA) for first time buyers – housing support contributions towards mortgage payments for first-time buyers
• Universal Credit: change capital rules so those saving for a deposit are not penalised, aiding aspiration
• Changes to Support for Mortgage Interest (SMI) entitlement: SMI entitlement starting at three months, with eligibility not tied to zero earnings
• The Housing Support Initiative (HSI): to explore the possibility of a pilot to bring forward new supply of social homes with right to buy potential.
Might be a mad idea I accept but has anyone considered building a lot of social housing? Might that not help the situation?
Might be a mad idea I accept but has anyone considered building a lot of social housing? Might that not help the situation?
And maybe not selling what you already have?
It says this in touchbase:
Plans include several measures to be delivered by DWP as follows:
• Local Housing Allowance (LHA) for first time buyers – housing support contributions towards mortgage payments for first-time buyers
• Universal Credit: change capital rules so those saving for a deposit are not penalised, aiding aspiration
• Changes to Support for Mortgage Interest (SMI) entitlement: SMI entitlement starting at three months, with eligibility not tied to zero earnings
• The Housing Support Initiative (HSI): to explore the possibility of a pilot to bring forward new supply of social homes with right to buy potential.
Which Touchbase is that, I can’t see it anywhere?
It says this in touchbase:
Plans include several measures to be delivered by DWP as follows:
• Local Housing Allowance (LHA) for first time buyers – housing support contributions towards mortgage payments for first-time buyers
• Universal Credit: change capital rules so those saving for a deposit are not penalised, aiding aspiration
• Changes to Support for Mortgage Interest (SMI) entitlement: SMI entitlement starting at three months, with eligibility not tied to zero earnings
• The Housing Support Initiative (HSI): to explore the possibility of a pilot to bring forward new supply of social homes with right to buy potential.Which Touchbase is that, I can’t see it anywhere?
it says 10th June, I have subscribed so it was emailed to me