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Johnson's latest idea to to buy support


I've copied this over from a posting I made on a newspaper's website.

"So Johnson introduces mortgages for those on benefits and what exactly does he think is going to happen? For one thing banks will be more than happy to lend to someone on benefits if they, the banks, are aware as to just how big a discount on the purchase price a claimant might get for their council house. If the discount is as big as has been suggested the banks will be aware they cannot lose.

For example a benefit claimant manages to secure a mortgage and makes the due payments for a number of months and then due to some clerical error, being moved over from their current benefits to universal credit with its 5 week delay or other issue such as being late for a jobcentre appointment with their work coach, finds themselves being sanctioned by the DWP, just how are they supposed to continue making their mortgage payments? If they are unable to keep their mortgage payments going they'll quickly find the banks looking to repossess the house/flat, selling it off for a fraction of its worth but still recovering any monies they've lent to the would be home owner."

Sunny Clouds:
Yes, but that then puts the council house on the open market.  That then ties in with the whole buy-to-let...oops, I mean right-to-buy approach.  Attack social housing from every possible angle.  Sell to people the idea that home ownership is what matters.

I know someone living in a house I nearly bought in the late nineties, just before my life fell apart.  It's a little post-war house with just enough front garden to park a car and a tiny back garden on a quiet road in a nice location.  But it's got three bedrooms, so someone living there could have a couple of lodgers or au pair carers. 

In those days, I'd have been able to get a mortgage on it because it was two and a half times my pay.  It recently went on the market.  My understanding is that currently the offers are six times the price back then.  Wages haven't gone up six-fold.

There are several laws to be changed before this can even look at buying homes.
1st to qualify for housing benefit or housing element of universal credit you MUST have a valid and commercial tenancy agreement - you can’t get HB if it’s a contrived tenancy - mum buys a house and rents it to adult child etc.

2. Banks/lenders are required to do an affordability check to see if you can afford the fluctuations in interest rates etc

3. You require a deposit, now working age claimants cannot have more than £6000 in savings without it being deducted from income related benefits.  If you have more than £16,000 in the bank, even if it’s to pay your tax bill in 2 weeks, you get refused income related benefits.  Several people who had their tax in their accounts at the start of the pandemic found this when they were told to use the tax money to exist as they’d been refused UC.

4 Housing Associations cannot be forced to sell their stock - this was where the policy fell apart when G Osborne tried it years ago

5 although DWP does help some home owners with mortgages they have to be on income related benefits for 39 weeks continuously before they qualify for Mortgage Interest Payments, you think ok the interest on my mortgage is at least getting paid - no it’s not, DWP uses the Bank of England base rate, currently 0.5%, and pays the equivalent interest to that, they also state it’s a loan and is repayable when the house is sold with DWP getting their money back first.

6 you would need to qualify for an interest only mortgage as DWP doesn’t make any payments towards the capital loan. Even if they did change the rules and allowed you to use housing benefit for this, housing benefit is set by the local housing allowance and you only get a specific amount based on how many bedrooms you NEED.  Under 35 you get the shared room rate (£65/w in my area) over 35 you qualify for the one bedroom rate mines is £85.05/w.  The local housing allowance often doesn’t cover the rent at all and you rely on a discretionary housing payment to cover the shortfall.  So if a mortgage is £380/m and your current housing allowance is £280 you have to make up the shortfall.

7 building and contents insurance is necessary to take out a mortgage, most housing association tenants don’t have contents insurance as they can’t afford it so how are they going to afford this.

8 who pays for any repairs, I recall the pensioner who came in to buy his council house in a high rise & when I explained the council would bill him for his share of any repairs to the overall block he was horrified, he thought the council retained responsibility for repairs to the lift, the roof, the close windows, security doors etc.

This policy is a non starter in my view but we all know Boris breaks all the rules all the time

Sunny Clouds:
Boris will love it if he can't get this through parliament.  He doesn't care about the people who'd buy the houses.  He just wants to push forward a particular ideology, so if MPs or peers from other parties challenge this in some way, he can accuse them of wanting to keep people poor.

This is just another unworkable vanity project for Boris that hasn't been thought through in all the details as suggested.

I had read somewhere that there was an idea to no longer count savings in Lifetime ISAS and Help to Buy ISAS in the savings limit for UC so people could try and save a deposit for a house without it affecting means tested benefits. This sounds like a good plan as these funds can't be used for anything else and people who become unemployed with these sorts of ISAS are often financially penalised when the funds are actually inaccessible due to the terms of the ISAS.

However, I don't see how the average person on UC will have any money left over at the end of the month to invest in such a savings plan.


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