Benefits and mortgages

leeCal

Boris Johnson is about to announce that rules will be changed to allow benefit claimants to buy homes according to the Times newspaper.

Good news for some! 🙂

see tomorrows newspaper headlines at sky news
https://news.sky.com/story/saturdays-national-newspaper-front-pages-12427754

calcotti

Biblioklept said:

I didn't realise they couldn't, I thought the problem was mortgage companies not lending to them and don't know how he can change that 

Exactly so. See https://www.theguardian.com/politics/2022/jun/08/boris-johnson-lancashire-speech-housing-economic

Reports said that the speech would outline measures to allow people to use benefits to help in securing a mortgage. The Times said he will argue that the £30bn in housing benefit that currently goes towards rent would be better spent in helping people become first-time buyers. However it remained unclear how this would help people on such low incomes with lenders increasingly concerned about affordability criteria amid the cost-of-living crisis.

If true, this sounds like a typical Johnson sketch idea without much thought to the practical implications (nor can I imagine that any such move would have any support in the Treasury). It plays to the Tory obsession that home owning is fundamentally better than renting without acknowledging that the many of the problems people have rent could be removed through a different legislative framework for renters.

(Providing extra support to people with mortgages who fall on short times on a temporary basis would make sense.)

Alongside this the report also says

Another anticipated proposal is the extension of the right-to-buy discount scheme for social tenants to those in housing association properties, an idea first raised in the 2015 Conservative manifesto and condemned as likely to make the housing crisis worse.

Another Tory obsession which has made the housing situation worse. A policy too which has contributed to the housing benefit bill. Houses that were built by the government and let at low rents are sold off at a knockdown price to buyers who can, after time, end up letting them out again at a much higher rent so the housing benefit bill for whoever occupies the home at tha time is much higher than it would have been if the property had remained social property.

leeCal

Oh! And I naively thought it was good news. ☹️

racyguy

woodbine said:

This is laughable how on earth he thinks this will "re-launch" his premiership is utter nonsense, it's not impossible to secure a mortgage on benefits just very very difficult.

But the crux of this is that people 'waste' a great deal of money when receiving Housing Benefit - they are simply lining the pockets of private landlords so that THEY can pay their own mortgage.
It would be much simpler if the Housing Benefit payments are used to pay the claimant's mortgage?

At the moment Housing Benefit is not considered as income when applying for a mortgage. I have no idea what the levels are for housing benefit for a 3 bed family home but do believe that there will be little difference with the benefit and the mortgage payments. As for saving for a deposit of 5% - the government could take a 5% interest in the home repayable when the property is sold. In other words there would be no need to save for a deposit.

chiarieds

I have to take a slight issue with @racyguy saying, ' But the crux of this is that people 'waste' a great deal of money when receiving Housing Benefit - they are simply lining the pockets of private landlords so that THEY can pay their own mortgage.'

Having until last year been a landlord of a private property, we're not all bad guys. We had a lovely tenant for 8 years, in which time we never increased her rent, sorted out any problem she had very quickly, & no, the rent wasn't paying off our small mortgage, which had already been paid off in our late 30's.

Without private landlords, then surely the housing market would be even less?

poppy123456

racyguy said:

woodbine said:

This is laughable how on earth he thinks this will "re-launch" his premiership is utter nonsense, it's not impossible to secure a mortgage on benefits just very very difficult.

But the crux of this is that people 'waste' a great deal of money when receiving Housing Benefit - they are simply lining the pockets of private landlords so that THEY can pay their own mortgage.

Not sure how you’ve come to that conclusion. It’s got extremely more difficult in the past 8 years or so to find any landlord that will accept any tenant that’s claims benefits. 

If you are one of the lucky ones then you’ll likely need a homeowner guarantor. 

Lisatho11987777

Where I live most housing is rented private  becausec of lack of counciol property's  I would tsther pay private  rent because I can choose where I want to live 

I live in a 3 bed property two liveing rooms kitchen bath  room newly decorated before I moved in brand new carpets  and Cooker and bath and shower lovely house  with a sea view  

Only problem with private renting is the deposit  I had to pay what they call the first and last month plus one month's rent in advance my rent is 740.00  so I had to pay a large deposit 

It was the house I wanted the inside of the house is  done to a high standard  and I have the house for as long as I want to live in it 

People say to me that is alot  but on my street 3 bed counciol houses are only 50.00 cheaper on the rent and with  counciol housing uou have to buy your own carpets /flooring  and do your own decorating  so it's swings and roundabouts  if you own your own house yes mortgages are cheaper than what some people pay rent  but then if you had to move for some reason it's not so easy plus you have to pay for repairs and things like that .

I used to own my own house but I would rather rent personally 

racyguy

woodbine said:

HB and LHA are both quite different than SMI which of course is now a loan not a benefit, I'm not quite sure why anyone would expect HB to be classed as income when applying for a mortgage, because HB would stop if/when a mortgage was granted.

But it could continue if a mortgage is linked to it.

racyguy

Username_removed said:

A good home over your head is never a waste and it’s easy to forget that renting has many advantages. Given the average age people pay off a mortgage is 57 and life expectancy is falling many people get barely 15 years mortgage free and that just as their income freezes. 

As mentioned in another recent thread on right to buy/affordable homes buying homes is not the issue. Having sufficient income and capital to maintain them is the issue.

That's on the assumption that they remain living in the same house until the mortgage is paid off.
I've never paid off a mortgage simply because we have moved 6 times since we bought our first home. The previous 5 properties were  sold for considerable more than what we paid. The 6th home was to downsize to a small three bed semi new build. The purchase of that home was by way of our savings which rolled up out of the profits made on the previous 5. We were mortgage free in 1998 aged 49.

calcotti

woodbine said:

racyguy said:

woodbine said:

HB and LHA are both quite different than SMI which of course is now a loan not a benefit, I'm not quite sure why anyone would expect HB to be classed as income when applying for a mortgage, because HB would stop if/when a mortgage was granted.

But it could continue if a mortgage is linked to it.

But that isn't how it works you can't get HB or LHA if you are claiming SMI.

I think race guy is speculating about what could happen if the rules are changed in line with Boris’s latest random thinking aloud (to the extent that thought comes into it).

racyguy

woodbine said:

racyguy said:

woodbine said:

HB and LHA are both quite different than SMI which of course is now a loan not a benefit, I'm not quite sure why anyone would expect HB to be classed as income when applying for a mortgage, because HB would stop if/when a mortgage was granted.

But it could continue if a mortgage is linked to it.

But that isn't how it works you can't get HB or LHA if you are claiming SMI.

You wouldn't have to claim the SMI loan. You would get your HB extended to cover the mortgage payments.

racyguy

calcotti 

I think race guy is speculating about what could happen if the rules are changed in line with Boris’s latest random thinking aloud (to the extent that thought comes into it).

Of course I am but it would be so beneficial for those on benefits to be able to say that they are buying their own home and not just renting one.

calcotti

woodbine said:

racyguy said:

woodbine said:

racyguy said:

woodbine said:

HB and LHA are both quite different than SMI which of course is now a loan not a benefit, I'm not quite sure why anyone would expect HB to be classed as income when applying for a mortgage, because HB would stop if/when a mortgage was granted.

But it could continue if a mortgage is linked to it.

But that isn't how it works you can't get HB or LHA if you are claiming SMI.

You wouldn't have to claim the SMI loan. You would get your HB extended to cover the mortgage payments.

Absolutely not how HB works it is a completely different benefit to SMI (which is now a loan not a benefit), please try not to give innacurate information is possible it only confuses people.
Although I appreciate that recent news from the govt. would cause people to assume this.

I don't think that raceway was suggesting it works like that at the moment. He is speculating about how things might work if the government were to provide benefit support for people paying mortgages. The subject of this thread is not about existing benefits - it's a response to Boris floating an idea in a speech.