SMI saves 250,000 familes from reposession in last 3 years

ruggedtoast

SMI is an essential benefit to help hardworking, but highly mortgaged, public sector workers who may be suffering due to the brutal and undemocratic slash and burn Tory policy on public services.

I approve of SMI.

angrypirate

ruggedtoast wrote: »

SMI is an essential benefit to help hardworking, but highly mortgaged, public sector workers who may be suffering due to the brutal and undemocratic slash and burn Tory policy on public services.

I approve of SMI.

Tell me thats sarcasm. Please.

Graham_Devon

HAMISH_MCTAVISH wrote: »

*Unless, like Graham, you want to see families and children thrown out in the street so you can buy a house on the cheap.

Well done Hamish....

This was discussed on another thread before creating one for the item, and this is what I stated...

Graham_Devon wrote: »

The CML has just backed up everything I have stated on this forum over the years regarding SMI. So thanks shortchanged. Everytime I've mentioned it I've just been told I have no evidence and just want families and children chucked out onto the streets.

How bizzare that that's exactly what you accuse me of after I mention it! *yawn*

Graham_Devon

chewmylegoff wrote: »

Personally, I expect that the vast majority of people on SMI don't have a large amount of equity, and I wouldn't be surprised if large swathes of them are in negative equity. I have no evidence for this, it is just my personal suspicion.

Figures previously used show that over 50% of those on SMI are over 60.

So I would think a lot do indeed have equity.

A couple more statistics...

In November 2009, [STRIKE]965,000[/STRIKE] 225,000 households were on the SMI scheme. 15% of SMI customer were aged 60-64. 38% of SMI customers were aged 65+. Only 10% of customers were under 40 years of age.

The average amount owed on the mortgage for those over 65 works out at £20,000.

So therefore there should be a LOT of equity if that's the average mortgage.

chewmylegoff

Graham_Devon wrote: »

Figures previously used show that over 50% of those on SMI are over 60.

So I would think a lot do indeed have equity.

A couple more statistics...

In November 2009, 965,000 households were on the SMI scheme. 15% of SMI customer were aged 60-64. 38% of SMI customers were aged 65+. Only 10% of customers were under 40 years of age.

The average amount owed on the mortgage for those over 65 works out at £20,000.

So therefore there should be a LOT of equity if that's the average mortgage.

not that i'm arguing with the numbers - but have you got the link where this comes from. strange if one source is saying nearly 1 million households on it and another 250,000. (link i posted on last page says 250,000 claimants, no mention of that just being the ones who would have been repossessed without it - and it's difficult to see how anyone could really work out what % of claimants would end up being repossessed if there was no SMI).

Graham_Devon

chewmylegoff wrote: »

not that i'm arguing with the numbers - but have you got the link where this comes from. strange if one source is saying nearly 1 million households on it and another 250,000. (link i posted on last page says 250,000 claimants, no mention of that just being the ones who would have been repossessed without it - and it's difficult to see how anyone could really work out what % of claimants would end up being repossessed if there was no SMI).

Sorry, my bad....hold my hands up. I was reading the wrong table.

It was 225,000 customers on SMI in 2009. Have corrected.

The original document is here:
http://www.dwp.gov.uk/docs/support-for-mortgage-interest.pdf

Bear in mind it's from 2009.

So I guess what my error shows us is that 25k more households are now on SMI since 2009.

chewmylegoff

Graham_Devon wrote: »

Sorry, my bad....hold my hands up. I was reading the wrong table.

It was 225,000 customers on SMI in 2009. Have corrected.

The original document is here:
http://www.dwp.gov.uk/docs/support-for-mortgage-interest.pdf

Bear in mind it's from 2009.

So I guess what my error shows us is that 25k more households are now on SMI since 2009.

table 11 in that document is worth thinking about.

average SMI payment is £49/week for households with a male head, £42 for households with a female head. SMI costs less than £49 x 52 = £2,548 per household per year.

housing benefit costs £20 billion a year and there are 4.765 million claimants (http://www.ifs.org.uk/bns/bn13.pdf) so the average cost of paying housing benefit is about £4,200 per year.


re: SMI, i thought it was only available for a maximum of 2 years so surprised to see that half of the claimants are pensioners. were the rules different previously? i.e. are those pensioners still on it a hangover from the previous rules.

Graham_Devon

chewmylegoff wrote: »

table 11 in that document is worth thinking about.

average SMI payment is £49/week for households with a male head, £42 for households with a female head. SMI costs less than £49 x 52 = £2,548 per household per year.

housing benefit costs £20 billion a year and there are 4.765 million claimants (http://www.ifs.org.uk/bns/bn13.pdf) so the average cost of paying housing benefit is about £4,200 per year.


re: SMI, i thought it was only available for a maximum of 2 years so surprised to see that half of the claimants are pensioners. were the rules different previously? i.e. are those pensioners still on it a hangover from the previous rules.

I believe, though I am open to be corrected, that the 2 year limit only applied to those on JSA. It was a new limit bought in with the changes, previously there were no limits at all, but by the time people actually got SMI, it was too late.

I believe that for anyone else, there isn't a limit. Again, stand to be corrected.

This is one of my major issues. Like you say, its £49 per week on average. However, and this is where the fairness discussions that the Lords had come in (surrounding universal credit) as they state it isn't a fair or justified use of taxpayer money at present...

With SMI, the over 60's are likely to benefit until the mortgage ends. Unlike renting, the person on SMI will own the house at the end of it. So the taxpayer is directly paying the interest on the asset for that household.

They are then free to sell / pass down that asset, and the taxpayer never see's a return.

If a pensioner has say 6 years left on the mortgage, based on averages, thats £15,248 of taxpayer money injected into an asset for the household which is never reclaimable.

In many cases, as the document states, SMI will not only be covering interest, but capital too, therefore the windfall could be larger.

chewmylegoff

Graham_Devon wrote: »

I believe, though I am open to be corrected, that the 2 year limit only applied to those on JSA. It was a new limit bought in with the changes, previously there were no limits at all, but by the time people actually got SMI, it was too late.

I believe that for anyone else, there isn't a limit. Again, stand to be corrected.

This is one of my major issues. Like you say, its £49 per week on average. However, and this is where the fairness discussions that the Lords had come in (surrounding universal credit) as they state it isn't a fair or justified use of taxpayer money at present...

With SMI, the over 60's are likely to benefit until the mortgage ends. Unlike renting, the person on SMI will own the house at the end of it. So the taxpayer is directly paying the interest on the asset for that household.

They are then free to sell / pass down that asset, and the taxpayer never see's a return.

If a pensioner has say 6 years left on the mortgage, based on averages, thats £15,248 of taxpayer money injected into an asset for the household which is never reclaimable.

In many cases, as the document states, SMI will not only be covering interest, but capital too, therefore the windfall could be larger.

is it any more "fair" to the taxpayer to pay even more in LHA to support the claimants? taxpayers don't get a return on LHA either.

personally i would rather the cost to the taxpayer was £500million than £1 billion, given that there is no taxpayer asset generated either way.

Graham_Devon

chewmylegoff wrote: »

is it any more "fair" to the taxpayer to pay even more in LHA to support the claimants? taxpayers don't get a return on LHA either.

personally i would rather the cost to the taxpayer was £500million than £1 billion, given that there is no taxpayer asset generated either way.

Stopping SMI does not automatically mean that the taxpayer will then have to fund LHA to support the same household.

It's often put across however, and you have done so here.

So let's look at the over 65's. They have an average 20k mortgage. We can only deal in averages here, so we'll take the average £161k house price.

If the average mortgage of the average household over 65 on SMI is 20k, that suggests the average equity is £141k.

LHA would not support someone with £130k (allowing for selling fee's) in their pocket. They would either have to use that 130k to rent a property (lasting 14 years on a generous 9k a year rental bill) or buying another smaller place.

LHA would only support those on SMI who, after coming off SMI, have absolutely nothing, i.e. have no equity at all.

The argument that people would automatically qualify for LHA is just one put across by certain people on the forum as a means of writing off any discussion....same as the "you want families and children chucked out into the streets".

As for fairness. In such scenarios, I don't believe it's a fair system, no. Say for instance you have the same income, but 20k in savings as another 65 year old on SMI. You will be required to use your savings to pay the mortgage before qualifying.

In these cases, most people forsee the problem and have no choice but to sell up and readdress finances before the problem hits.

As for fairness in other scenarios....take someone recently divorced on income support with the house signed over to them. They now can't afford the mortgage, so will get SMI to cut the costs. In the long term, they will get the benefit of owning the house.

Take the same scenario down the road, but someone who hasn't had the house signed over to them. They will have a roof put over their head, but never see a financial advantage from that.

Both in the same boat, both rely on the taxpayer to cover their housing costs. One could cover the costs themselves but don't have to and get an asset advantage. One can't cover the cost themselves in any way, so never gets the added advantage.

Is it fair? Well it's down to personal opinion, but in my opinion, I can't see anything even slightly fair about it.