Universal credit - housing element?

drc

I have been looking at the Universal Credit Explanatory Memorandum for the Social Security Advisory Committee document.

http://www.dwp.gov.uk/docs/uc-draft-regs-2012-memorandum.pdf

At point 91, it says;

Limit on Payment of Housing Costs

Limit on Payment of Housing Costs

91. There is to be a time-limit of two years on payment of housing costs to claimants in the full conditionality group of Universal Credit. When such a claimant has received help with housing costs for a period of two years these payments will stop and will not be reinstated until a claimant has had a break in claim and has served a further waiting period. This is underpinned by the principle of providing short-term help through the benefits system and because it is not considered appropriate that this help is provided indefinitely. This is intended to focus the help that is given through the benefits system on those on low income when they need it most.

Does this apply to all housing payments such as housing benefit/local housing allowance or only to support for mortgage interest? It isn't clear. This is a huge change if it does apply to all.

BigAunty

I can't answer this definatively.

However, I have come across other documents that suggest the govt want SMI to be a short-term claim only rather than have it run indefinately as it does for some claimants. The paper and the speech to parliament specifically says that the govt wants SMI to be short term help for the unemployed and those who face no realistic prospect of employment should sell up.

The info I came across also suggested the govt hasn't yet ruled out a loan type scheme for SMI whereby a charge is put on the house and later recouped from the claimant.

I doubt very much HB will be time limited. The govt have screwed up the housing system so much that most HB claims are made by those in employment!

benefitbaby

Big Aunty is right in suggesting this is regarding SMI. So not affecting people in rented properties.

The government did raise the possibility of introducing payments of mortgage interest help contingent on a second charge being applied to the property so that if/when it is sold the SMI paid can be recouped, but I haven't heard much more on this.

BigAunty

The government believe that SMI is only really viable as a short-term measure for people who can return to employment and pay their mortgage in the conventional way. There's a poster on this forum who said they'd been on SMI for 13 years.

The other problem with long-term SMI claims is that when the mortgage term is due to end, the claimant invariably has no means to pay back the large capital that is due then and their lender will not extend the mortgage term, so they have to sell up to prevent repossession anyway.

This is the government line

"The Government is committed to continue providing support for mortgage interest in future, to assist those owner-occupiers who qualify for this help to remain in their homes and avoid repossession as far as possible. Our strategic vision for support for mortgage interest in the future is that it should provide short-term help to people at a time of personal crisis such as loss of employment or relationship breakdown, and incentivise work. This is because it is only through full-time work that mortgages can ultimately be re-paid.

Owner-occupiers who claim income-related benefits will previously have obtained and sustained mortgages and, usually, they will have done this while they are in full-time work. Most owner-occupiers should be aiming to move from short-term SMI into full time work to support their housing tenure or they should take other steps, such as selling their homes and downsizing, if they are unable to sustain their mortgages.

In circumstances where people need long-term help with their mortgages because they are disabled or have retired with outstanding mortgage liabilities, the Government believes that it is not fair to pay SMI indefinitely without recouping some of the cost to taxpayers, through sharing in the asset gain to those individuals made possible by the support from the State. The Government believes that for new claims in the future, in exchange for supporting someone to live in their own home whilst they are on benefit for long periods, the best approach would be to put a charge on their properties to recoup the SMI paid. The Government is still considering this option."

http://www.publications.parliament.uk/pa/cm201213/cmselect/cmworpen/writev/576/m32a.htm

BigAunty

I don't know the current figures but in there were 225,000 benefit claimants receiving SMI as at November 2009 with around 980 homeowners have been accepted under another mortgage rescue scheme.