SMI: More changes on the way

dtsazza

Really2 wrote: »

The Truth is SMi is the most cost effective solution for the government at the moment.

With low rates it is far cheaper to pay the interest on a loan than pay to re-home someone and pay HB.

Cutting a deficit should use least cost solutions, this seems to be the case.

Saying that we shouldn't adjust a benefit because otherwise it would lead to another more expense benefit just highlights the imbalance and perverse incentives that need realigning.

In other words, an even cheaper approach to paying SMI, is to cut SMI and remove/reduce housing benefit. That saves more money than either of your suggestions.

And in case you don't consider that to be fair, I put to you: why do you think that someone deserves to live in a property that they can't afford?

People generally seem to be in agreement that bailing out the banks was abhorrent because they get to keep the gains if their gamble pays off, but the taypayer takes the hit when it doesn't.

This is exactly the same situation, where people took out a highly leveraged (in some cases, infinitely-so) product secured on an asset without, perhaps, properly assessing the risk. If house prices and/or their income went up, you can bet that they wouldn't pay "negative SMI" payments back to the taxpayers; since their gamble has failed, why do they get to stay in the same situation?


I have absolutely no problems with telling someone that if they can't afford to live in a house, that they aren't able to. Surely that's common sense? Why are we gifting people taxpayers' money to enable them to live beyond their means?

StevieJ

SecondLegDownIsTheBigOne wrote: »

It seems that the ConDems haven't finished with their reform of SMI.

Which is



and



http://www.guardian.co.uk/money/2011/dec/06/coalition-charge-support-mortgage-interest-scheme

Looks like another prop is to be kicked away.

Why stop there? why not put a charge on the houses of BTL who rent to people without a job

julieq

Emy1501 wrote: »

Last time I looked the suggestion was that More than half of people claiming smi were over 50. If this is true then I suspect most of these people will have a decent amount of equity in their homes and therefore where they have they should be selling their house after a year or so of support unless they have become ill or disabled

Half are over 60.

So the proposal says put a charge on their home after 6 months of payments. What do you think the headlines are going to look like if it's implemented? No-one is suggesting that anyone sells their home either, it's not part of the proposal. A charge is just run up which is paid off after death. It's therefore a retrospective death tax. It will tend to be applied to poorer old people more than those with savings and pensions, for fairly obvious reasons, so it would be political suicide to implement.

The amount paid in SMI is tiny in comparison with housing benefit - £400K as opposed to £20Billion. The average amount is less than half than is paid to people in the rented sector. It's part of the package of social security that homeowners pay for in tax and it's ridiculous and mean spirited special pleading to suggest it should be removed.

Even if the benefit were withdrawn it would have no effect whatsover on the housing market because you're not creating net homes, you're just moving someone from one sector to another. But that would be at the cost of considerable hardship to vulnerable people at a difficult point in their lives and it would kill people. Literally. Forcing people to sell houses they'd brought their children up in while a crowd of baying jackals circle round looking for bargains. Disgusting. And then explaining to them we'll pay twice what we were paying before so they can rent a house somewhere else.

If you're going to go off on one on unfairness, why not explain how it's fair that people with savings who can't claim benefits should have to pay NI?

Emy1501

People need to become responsible for their own debt whether their 25 or 65. The impact on the housing Market is irrelevant. We should only be looking after the Ill/disabled after a year or so of someone being on smi. After that people should sell up and find somewhere smaller or use their equity to rent. There are many people of all ages doing this all the time. Last time we bought most the properties we looked at were old people looking to downsize for financial gain.

The reality is few people on this benefit after a year will get another job. I also can't see a problem with a charge on property. If people don't want this then insurance is available to cover these issues when a mortgage is taken out.

There are too many excuses regarding why we can't punish those who are partly responsible for mess we are in. My family are expected to accept cuts and if we are then so should those who can't pay debt and aren't I'll or disabled

People are never going to learn from their mistakes if there are little penalties for getting into debt.