Housing benefit for mortgage?

Jowo_2

Mandymull wrote: »

Interesting post....we have two girls, both with profound learning disabilites and are looking in to supported living for them both. we were told by the LD TEAM Benefits officer that THEY could in theory own a property with their HB paying the mortgage....i had never heard of this before but have spoken to tow paretns now of young people with similar disabilites in supported livng who are 'buying' their porperty with thei HB money.....r

I've heard of Disability Living Allowance qualifying as income for the purposes of a mortgage. Could it be the DLA element, plus the parents of them acting as guarantors on the mortgage, that could account for this?

It's also possible for landlords to let out their properties to tenants that are close relatives, so its also possible for a parent to effectively have their children pay off their mortgage and then gift them the property (though this probably has tax issues for them to sort out).

sweetersong

The new scheme in regards to some young people with certain disabilities buying their own home is on a shared ownership basis, probably a very low percentage they have to buy, so can use other benefits to pay for the small mortgage and will be able to get housing benefit towards the rental part

These are done through some housing associations, not sure how many, my ex employer was a housing association and they were just starting to offer these, in their case for young people with certain learning disabilities

Mandymull

we , the girls parents are not being asked Tto be guarantor for the mortgage. i have double checked this morning and YES there is a clause for those who are severely disabled to own their home, using HB....for the mortgage repayment. It is not a clause that is well advertised i was told this morning to stop the flood gates is the reason i was given. Have spoken to the young mans dad last night, they are not guarantors for their sons property.....he has it in his own name etc....his HB pays for the montly repayments, i did ask if he was a jointly owned property and they said no...
MANDY

Jowo_2

That's news to me. I've certainly heard of people's benefits being treated as income for the purposes of a mortgage, and how relatives can effectively pay off a buy to let mortgage when their tenants are close relatives on HB. The absolute basics of HB, as I understood them to operate, is that it is only paid to those with a liability to pay rent (therefore an owner occupier can never get it for the mortgage element of their property) and I wasn't aware of an exception to it for the severely disabled.

Even Disability organisations that publish a factsheet of how it works make clear that it is for rent, not mortgage costs.

http://www.disabilityalliance.org/f44.htm

HB forms also tend to make clear that it is for 'Anyone who is on a low income and has to make payments for rent ..who does not own the home in which they live.' Also, they ask upfront if the applicant is an owner occupier and want proof of the rent liability with the claim (copy of tenancy agreement).

I'd be interested in a HB expert publishing a link to the little known regulation that give the severely disabled the right to have their mortgage paid directly by housing benefit.

Mandymull

i will try and see if the guy who does the benefits at our local Adult disabilty team will give me the link or at least point me in the right direction...
i was shocked and worried to think that my girls' culd own their own house, how on earth would they be able to maintain the house etc....given they will always be on benefits for life and will never have the opportunity to work even part time....mx

intranicity

I'd be interested to know too, different situation, but I am in a similar position to your girls in that I'm disabled, unable to work and likely to be on HB for the rest of my life. I know that HB isn't meant to pay a mortgage, but in some situations it would save the state a fortune in that after 25 years, HB wouldn't be necessary?

real1314

Mandymull wrote: »

we , the girls parents are not being asked Tto be guarantor for the mortgage. i have double checked this morning and YES there is a clause for those who are severely disabled to own their home, using HB....for the mortgage repayment. It is not a clause that is well advertised i was told this morning to stop the flood gates is the reason i was given. Have spoken to the young mans dad last night, they are not guarantors for their sons property.....he has it in his own name etc....his HB pays for the montly repayments, i did ask if he was a jointly owned property and they said no...
MANDY

First rule of HB;-

There must be a liability to pay rent.

Sorry but I think you're being sold a load of codswallop. :cool:

Jowo_2

real1314 wrote: »

First rule of HB;-

There must be a liability to pay rent.

That's my understanding, too, so while I am open-minded about this alleged loophole that means those with severe disabilities have a property bought from them by the public purse, I am also equally wondering if there has been a mistake made by those home owners who apply for local housing allowance, or a simple mistake made around the type of housing (shared ownership).

To Mandymull, just in case it's not clear shared ownership is about part owning/part renting a property and it lets the owner staircase up from part to full ownership over time and this often takes place through a social housing landlord, such as a housing association.

This is different than joint ownership which I touched on when I wondered if the child and parent were on the mortgage together. You may already be aware of this distinction, it's just you never said if the properties you are referring to are Shared Ownership, you just said they weren't jointly owned.

intranicity

Jowo wrote: »

That's my understanding, too, so while I am open-minded about this alleged loophole that means those with severe disabilities have a property bought from them by the public purse

Totally agree with you, I understood that this wasn't possible, but it would make sense and save the public purse a fortune!

Think about it, whats cheaper paying Housing Benefit for life from say age 18 to maybe 70 or more is at least 52 years, in theory if a mortgage was provided (Only to meet the minimum housing requirement) then that could mean that by age 43, there would be no need to pay any further Housing Benefit! I know that many people would not agree that you should have your mortgage paid, but common sense alone shows some legitimacy for it!

Jowo_2

intranicity wrote: »

...
Think about it, whats cheaper paying Housing Benefit for life from say age 18 to maybe 70 or more is at least 52 years, in theory if a mortgage was provided (Only to meet the minimum housing requirement) then that could mean that by age 43, there would be no need to pay any further Housing Benefit! I know that many people would not agree that you should have your mortgage paid, but common sense alone shows some legitimacy for it!

I could understand the money saving aspect for the public purse for the severely disabled who will never be able to enter employment. As you've indicated, it could work out cheaper to pay the mortgage for 25 years than HB for twice or three times that period.

But as you've noted, it is unpalatable on an ideological level for some that the taxpayer essentially pays for a personal asset, that the individual holds in a private capacity, capital that they later transfer to a family member on their death, for example.

In this scenario, there is scope for thousands of people to inherit estates upon the death of a severely disabled person, worth millions of pounds overall, all paid for by the tax payer and enjoyed by individuals who merely passively receive a property.