New loan instead of housing benifit

bluebluecow · 14 January 2018 at 12:13AM

Hi

Don't know if people are aware of this change we we rnt till this morning and the dreaded brown letter arrived.

We get housing benifit that pays the interest on our morgage.

The letter today informed us that from March there will be no housing benifit for home owners . Instead we can apply for a loan which they will pay the interest on our morgage until we sell the house. At that time any money that they have paid will be paid back to them from the house sale.

Does seem a bit unfair that by buying our own home when both of us where working we are now being penalised. If we where renting then the housing benifit would continue as it had.

marliepanda · 14 January 2018 at 12:25AM

You don't get housing benefit, you get SMI.

You're not really being penalised. When a tenant moves out they don't get any money back from the house. When you sell, you will get money from your sale, part of which has been paid for by benefits.

The country sadly isnt rolling in money. As a homeowner, you are in a better position than many. Therefore, when you sell and have money, you can pay back the mortgage help you have had. There is simply not enough money for people to have their mortgages paid.

konark · 14 January 2018 at 2:54AM

The SMI payments only covered interest so no part of the capital was being repaid by the taxpayer, so the householder made no real gain..

Most privately rented houses are being bought by the landlords on mortgages, so the HB goes to pay off the landlords interest AND capital. Can the country afford that? Probably not but the Govt are willing to pay it.

Morever SMI is generally a fraction of the HB payment for the same house so represents a much better deal for the taxpayer in keeping families from becoming homeless.

marliepanda · 14 January 2018 at 3:11AM

konark wrote: »

The SMI payments only covered interest so no part of the capital was being repaid by the taxpayer, so the householder made no real gain..

Most privately rented houses are being bought by the landlords on mortgages, so the HB goes to pay off the landlords interest AND capital. Can the country afford that? Probably not but the Govt are willing to pay it.

Morever SMI is generally a fraction of the HB payment for the same house so represents a much better deal for the taxpayer in keeping families from becoming homeless.

Householders gain through equity going up. If they sell their house and raise a profit, why should they not repay the money that was paid to help them do that?

SMI used to (may not be now) be set at a particular interest rate, rather than the actual interest of the claimant, so many did have capital paid off as the rate was high.

Landlords are in a business, they have risks and have many legal things to comply with in order to run their business. Homeowners do not have that.

Sarastro · 14 January 2018 at 9:19AM

I think the system of support has to be different for those who have the asset of a house and those who don't.

The purpose of Housing Benefit (or whatever it's called now) is to help keep a roof over your head if you fall on hard times. If you have the asset, the government is effectively expecting you to use that rather than society bailing you out - it's wrong to use tax payers money to subsidise an individual's house purchase. In other words what the government is saying is, "if you can't afford the house you are in, we will help you until you either sort it out or move to a place you can afford".

For those who don't have an asset, the government has little choice but to pay their rental cost because otherwise they risk becoming homeless and we have so little social housing, we can't move them into social housing.

So for home owners I think it is less generous, but that's a reflection of the austerity we are still paying for and the changing economics of the housing market.

landlord2016 · 14 January 2018 at 10:00PM

I think both side has a argument.
I hard some people say we do not want to buy house as our housing benefit is closed.

konark · 15 January 2018 at 5:54PM

Sarastro wrote: »

- it's wrong to use tax payers money to subsidise an individual's house purchase. .

For those who don't have an asset, the government has little choice but to pay their rental cost because otherwise they risk becoming homeless...

..unless the individual is a rich BLT investor.

Homeowners also risk becoming homeless, and often have little actual equity or even negative equity, so why the Govt will give hundreds of pounds a month to renters and absolutely nothing to owners is a mystery to me. Austerity doesn't explain unfairness

NYM · 15 January 2018 at 6:08PM

Renters, both in the private and social sector that require a top-up in their rent have no choice. A homeowner can, if they choose, sell their property and use whatever they make on it, to rent somewhere.

If the property is in negative equity, a 'loan' from the Government to help keep their home can surely only be regarded as a positive. If it isn't sufficient, then getting a top up whether it needs repaying or not, won't help.

Confuseddot · 15 January 2018 at 7:05PM

Its a difficult one as I would imagine most people on SMI are those who are sick as I believe you only get it for a limited time on JSA, may be wrong.

My friend gets SMI which is about 1/3 of the LHA and 1/2 of similar council house. However due to the nature of her illness she isn't deemed priority for council and can't find anything suitable private rental. Currently unsuitable property in negative equity so she can't sell and if the market does rise she would maybe have broken even before but now still be in debt due to having to pay back the interest.

Yet I know there are others who are getting there mortgages paid off with it too.

I do think that if you are getting less than the LHA rate it shouldn't be classed as a loan as technically you saving the government money.

I imagine most people who took out a mortgage could afford them at the time but due to ill health or circumstances out with their control now can't it seems tough to be punished to be trying to save for you future but thats life isn't it.

New loan instead of housing benifit

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