Earlier this month we highlighted the government’s plans to help claimants to take on a mortgage.
The proposals include:
- Extending the right to buy to 2.5 million housing association tenants.
- Changing benefits rules so that the 1.5 million people who are in work but also on housing benefit will be given the choice to use their benefit towards a mortgage.
- Changing universal credit (UC) rules so that claimants can save more than £16,000 without it affecting their UC, so long as they put it in a Lifetime ISA to go towards a deposit on a house.
- A review of the mortgage market to try and increase availability of low cost, low deposit finance such as 95% mortgages.
We asked our readers what they thought of the plans.
Over 400 people took part in the poll and over 130 people left comments as well.
The question we asked was: Will help to take on a mortgage improve your life?
The result was:
So pretty much exactly three to one against the idea that a mortgage would be life-changing in a positive way.
Some of the main reasons people were against the idea were around affordability. There were concerns that additional costs, such as maintenance and insurance, would be too expensive to manage on benefits. Others suspected that benefits would fail to keep up with rising costs, or that the DWP would change the rules in the future, and claimants would end up homeless.
There was also a strong suspicion that the end result would be much less affordable rented housing.
For some people, the whole idea sounded like a government plot to buy votes.
You can read all the comments on the original article, but below are some that illustrate our readers thoughts.
(Please note, we have corrected some minor typos in order to make the posts easier to read)
Whilst there was only a minority that supported the idea of getting a mortgage, they did have some powerful feelings about how positive a move it would be for them.
“Totally support it! I know it won’t suit everyone but having a home that I could potentially own and pass down to my children would be wonderful. Why shouldn’t benefits be seen as income to
secure a mortgage.”
“Will improve my very low self-esteem to own my own flat. I am 57, brought my son up alone with no partner or family network. He too, like myself, got a degree from university. I am now on ESA and PIP.”
“We think the Right to Buy is a good idea as we like the idea of owning our own home, being able to change the property as we like instead of a housing association placing too many rules and regulations on us all the time. Also the rents are getting ridiculous nowadays probably paying more than we would on a mortgage, so yes bring it on Boris.”
“I’d love to be able to use HB to pay mortgage repayments, it'd help me escape this dreadful housing association flat where I can’t sleep at night because of the noise from the flat above.”
“Yes! I've been a HA tenant of the same landlord for 14 years. I was rehoused into my current property as I was struggling with the stairs. I had a disabled wet room, the new property did not, and I've been waiting a year and 6 months managing with the sink. I was told I'd only be offered one property and if I didn't take it I'd have to stay where I was. I am not a problem tenant and kept to myself. I'd lived there 12 years and was quite well known and loved the area, I had my own back garden so when I was too poorly to leave the house I could still sit out. I was rehoused miles away to another borough where it's quite rural, according to google it's a 40 minute walk to the nearest shop, but for me it takes much longer as I suffer from mobility problems . . . I don't speak to another living human face to face for several weeks at a time, I can't even get another assistance dog as I no longer have my own garden. My landlord asked me what I would like and I told them, they have plenty of properties in that area but instead I'm isolated and trapped here. With this option of a mortgage I would be able to move somewhere more suited to me in an area I need to be in. My life has been destroyed and there's no way out.”
Already have mortgage
Some of the people who responded were writing from the point of view of experience, because they are former or current homeowners. Mainly, these commenters were very much against the proposal.
“At the end of next month my mortgage will be paid off. Quite an achievement for someone who has been a carer and rarely had work that pays well. BUT I will be moving on before I start my state pension next year. I have managed to do small essential repairs but now after 33 years my house requires a new roof, rewiring and improvements to damp coursing. These things cost thousands, far in excess of the mortgage repayments I have managed on a slightly higher income while working. I see this new scheme as completely barmy!”
“Absolutely , don’t do it!!!!!! i bought my council house in 2002, At this time there was a waiting list of many years to get disabled adaptations within social housing, if I bought , I could have my required adaptations within a matter of months. I did this. I received help with the interest on my mortgage so although I still had to pay towards it. However when this help with mortgage interest stoppedI then had to fund full mortgage payments from my benefits which I am supposed to live on. If I had continued to rent, I would have had no housing costs, no repairs or maintenance to fund and I live like a peasant, if you are on benefits, this is really not a good idea. As I am getting older I may need to downsize, if I sell my property I will lose any benefits I receive and be expected to live on the capital I have struggled to pay for and done without for many years.”
“I can't see having a mortgage, will help anyone. I had a mortgage years ago when I was working and it was the most stressful thing ever. Never knowing if interest rates would rise. Being on a low income would freak me out completely now I'm disabled.”
“We have just moved house with a new mortgage via Santander who were happy to include my income from ESA and PIP within the financial section of the application. Using this new scheme may prove to be very costly with regards to being able to afford a mortgage, given that the cost of living rises always exceeds any minor increase to benefits. So although you may be okay on your application, you find yourself struggling to cope financially and end up homeless.”
However, not all homeowners thought it was a bad idea.
“I would say yes, I purchased my house 3 month before becoming too ill to work, however as I had purchased my house from my local council which was at a highly discounted amount, my mortgage payments were roughly half of my rent payments, so I was able to put a bit aside for any repairs that were needed & pay a bit more to my mortgage each month, my mortgage is now only 6 months off being fully paid, which of course gives me extra money each month, not having that to pay, and I have my own home which I could sell, leave to my son after I'm gone, and it makes me feel more secure and in charge of my own destiny.”
Some people who commented, considered that they were left out of the scheme and so it couldn’t change their lives.
“These saving and house buying help schemes are not open to mature people who still do not have their own homes. I am in my 50's and never been in the position to buy but have been too old to benefit. There should not be an age cap on them.”
“I am in no position to take up the offer with less than £150 a week to cover everything including rent and council tax.”
“I don’t qualify as I don’t work due to disabilities. I live in private rented accommodation and am not on UC.”
“No, but that would be largely due to the fact I am 52 next birthday, and have tbi induced epilepsy. It has been diagnosed as lifelong, and will almost certainly limit the length of my life anyway. Luckily I have a beautiful housing association flat in a lovely quiet area, but I am without doubt completely terrified, confused and overwhelmed by all of this in equal measures. I just hope and pray that I am able to manage for the rest of my time.”
“Using HB towards mortgage payments only seems to be for those in work. I am unable work so it doesn't help me at all.”
Some people felt that the financial insecurity that taking on a mortgage would involve was enough to make this a bad idea.
“Personally the biggest problem with it isn't the idea, it's house prices and the crazy idea such people take out 95% mortgages which is a massive no no. It would be much better if Help to Buy was reformed and very favourable terms offered to such people. But again when house prices are so high and interest rates ok the rise, it's not a good time.”
“The last thing many people want is the uncertainty of a long mortgage and having decimated their safety net just to raise a deposit.”
The theme of additional costs, not just mortgage payments, was also a recurring one.
“How can this work? Folk lose their mobility car due to slow reviews so will they also lose their homes too? Very worrying. As I am a widow and own my house sadly I cannot afford the re-wire that this old house needs. Plus other much needed repairs.”
“People in receipt of benefits are already on the lowest possible income, and whilst owning your home is a lovely idea, there are financial liabilities that come with home ownership which do not affect people renting: maintenance, some service charges, liability for major structural repairs eg replacement windows to a block of flats.”
“In theory I like the idea of owning my own home - who wouldn't? But what about all the additional costs that go along with that? What am I supposed to do if there's damp or the roof blows off? Right now all that is my landlord's responsibility - I couldn't afford to own a house even if someone bought me one.”
“My concern is simply converting rent money to a mortgage may be great. But then who pays for repairs and upkeep? I think we will see an increase in repossessions. I'm also curious how mortgages would be paid when DWP choose to sanction someone.”
“I wouldn't personally take this up, owning my own house and dealing with the massive costs if the roof goes or the boiler, or foundations, or a tree spreads too far in the garden. It is too much uncertainty. There's no way I could afford the upkeep and live a life.”
Loss of social housing
For some readers, it was the probable reduction in social housing stock that made this plan a bad one.
“We should be totally opposed to this. Selling off council houses was an absolute disaster reducing local authorities stock of housing for people who are homeless, i.e. claimants. Most of it found its way to private landlords and buy to let schemes. Destroying Housing Association stock will compound this. And why the need to buy your housing association house anyway? If you go into care it will be taken from you anyway.”
“Just like the American sub prime mortgage scandal circa 2005, this crazy plan is doomed to failure. The whole idea of council housing is to provide homes for those who can't afford to buy their own. Don't decimate council housing stock. That's what Thatcher did and they've never replaced them since. They never will replace them, successive governments have realised that a housing shortage keeps house prices high, keeps employment high and builders rich. If you buy your own house, they will take the equity to pay for your care in retirement, so what's the point in buying anyway?
I am deeply suspicious of the whole ethnic of selling council and social housing, as that policy over the years has led to poor social housing stock, insufficient accommodation for the most needy and homelessness where homes are NOT replaced by local and national government as promised. The system is also open to abuse where landlords rent out former council housing which, by fair means or, often, foul, they have managed to acquire. These are usually at many times council rent. These people line their pockets at the expense of the taxpayers who originally paid for these houses to be built, for the good of society and not business.”
“What would change my life is improving access to and more social housing NOT encouraging more people to increase their personal debt.”
Some readers were simply suspicious of the government’s motives, for a variety of reasons.
“A few years ago a Tory politician (David Cameron?) said he was against social/council housing because it bred Labour voters!”
“How on earth does this plan help people who cannot work because of disability when benefits already fail to meet basic needs? It just encourages selfishness because there will yet again be even less homes at genuinely affordable rents for the many, including families with children, who desperately need them. But hey, home owners are more likely to vote Tory so money well spent by this rancid government!”
“Oh I think it has been very well planned out by the tories. They are wanting you to use the money they give you now in housing benefits to buy a property. Then when you need help with care in the future they will use your home to fund your care . So really it’s like a savings plan they are putting money in now but they will want it back later.”
“They are bribing their way to the next election and using vulnerable people to do so. More council houses need to be built and more rogue landlords need to be dealt with by the law.”
What do you think?
It may well be that these ideas never become reality.
But if they do, it’s important that people have a wide range of experience and opinions to consider before making a decision. If you’ve got anything you’d like to add to the debate, please post your comment below.