Unprincipled government u-turn?

Milarky

'Income Support Mortgage Interest' [ISMI] rules are being reviewed by the government and apparently they will raise the limit of £100,000 mortgage cover and/or reduce the waiting periods to qualify currently:

for all mortgages taken out since 2 October 1995
0% for 39 weeks [of claim] - '100%' [of interest for the eligible mortgage balance] therafter

for all mortgages taken out before 2 October 1995
0% for 8 weeks then 50% for 26 weeks - 100% thereafter

[over 60s qualify for 100% help from start]

http://england.shelter.org.uk/get_advice/advice_topics/paying_for_a_home/income_support_mortgage_interest


'1995' should give the clue that these restrictive rules were put in place by a previous 'Tory' administration during a previous period of government economies [£50bn budget deficits etc] and as part of their general 'attack' on the welfare state.

It is both apt - and unprincipled - of an 11 year old Labour administration to be looking at these rules. Apt because, if ISMI is going help many people stay above water, now will be the time - but unpricipled because they are only doing this after the MCL kicked off about it. They never listened to anyone telling them it was simply 'unfair' to exclude homehomers from assistance to stay in their homes without a substantial waiting periods [compare Housing Benefits - no waiting periods for people renting...] neither did they revisit the £100K upper limit - which when it was put in place was only likely to apply to 'rich' homeowners.

Don't get me wrong, I not with the likes of George Osborne - out to make hay with the government's disccomfort in the mortgage crisis (whose party it was that took a hatchet to ISMI in the first place) - I'm just pointing out the total lack of concern preceding pressure from the mortgage lenders and the sudden willingness to grant 'largesse' now.

If I were in the government - and not stymied by having contributed to the lack of a safety net in the first place - I wouldn't be stumping up extra cash - I'd have made sure that ISMI paid something to everyone that claims it from day one (principle) and I'd now be in a position (for example) to tell the mortgage lenders that they have to come up a scheme where they take some of their own money (e.g. rights issue) and make that available to their borrowers in addition to government support.

Turnbull2000

A renter is not paying towards a private asset. If a home owner is repossessed, then they can become a renter and receive support. If you want payment cover on a private investment, you should take out loss of earnings cover - not expect everyone else to bail you out.

Rebchappers

I completely agree with turnbull

If you take the risk of borrowing 100k on a property, you should make arrangements for appropriate protection in the case of being unable to pay the loan back. Not expect everyone else to bail you out

bubblesmoney

if the govt pays for private assets then why shouldnt everyone get the same share of the free gift. why keep the free gift for home owners who overstretched themselves. people need to be responsible and pay for their own future security by investing in pensions / life cover / MPPI / income protection / what ever suits them. no point over stretching and not making safetynet plans and then when the !!!! hits the fan expect everyone else to bail you out for ones ownfinanciai indescretions. just like shares, when u make an investment u reap the profits and the losses. before govts give handouts to people who made unwise investments (be it shares or houses or subprime loans or securities etc), the same investors should lose their shirts off their backs and every penny in their pockets and only then should public money be used to finance their bare necessities and not to fund someones investments. govts should max provide temporary accomodation in hostels and should not be funding private investments be they houses or shares as in northern rock fiasco. the nanny state harms savers and protects the leechers. people need to learn that if u ake stupid decisions then u need to face the music as well, otherwise we will next have a demand to finance theexcesses of credit card splurgers who overstretched themselves stoozing and up shitscreek when such options dry up and expect the govt to bail them out of possible bancruptcy by offering soft loans / grants.

dunstonh

When you buy a house with a mortgage you take on a responsibility for the risks that go with that. You can insure yourself to cover those risks but like many other areas, if you dont insure yourself then its your own fault if something goes wrong.

So, any funding to help homeowners above those that are in rented accomodation is wrong in my opinion. If they were to help the homeowners but then take a charge on the property for the amount of the support, then I think that would be very fair.

EdInvestor

Why is it OK for the Government to service the interest on a landlord's loan via HB to the tenant, but not the interest on an owner occupier's loan?The benefit payment does not extend to capital repayments.

You can see why banks are taking the view that BTL borrowers are less risky than FTBs, can't you?

opinions4u

Superbly put Ed.

mizzbiz

Have to say, as harsh as it is and as close to this situation as we could have been recently, I totally agree with the above arguments.

However, those who do not work get Housing benefit, general benefits, other free stuff etc paid for by those with a job (and often a mortgage). Surely it's fair they get something back when in dire need???? I do feel it could be done as an interest free loan or a capped rate (i.e. you can't exect benefit to pay for your half a million pound house but they will tide you over with a reasonable amount (say £500 per month)

Just a thought. The whole welfare system is unfair full stop, so I can't get too finicky with the people who, most of their lives, bear the cost of it.

mizzbiz

Just to add, 39 weeks is a hell of a long time to sustain a mortgage without help, and you can't get benefits if you have enough savings to cover this amount of mortgage, so I'm struggling (although I may be being a bit thick after a long day at work), to see how anyone ever manages to claim this mortgage relief from the state.

EdInvestor

Rules duly revised

The DWP has announced that ISMI waiting period will be shortened from 39 weeks to 13 weeks for new working age claims from April 2009.The capital limit for new working age claims will also be increased to £175,000 from £100,000 in April 2009.
The Government says this £100 million investment will help prevent a further 10,000 repossessions across the UK.