Low-Income Homeowners “At Risk” From Cuts To Mortgage Interest Help
Thousands of homeowners may be at risk of homelessness after new figures suggested cuts to mortgage interest help were hitting the working poor and pensioners.
Support with mortgage interest has been in place for homeowners since 1948 and the Support for Mortgage Interest (SMI) scheme was designed to protect claimants on qualifying benefits from repossession when out of work, retired or sick, by contributing towards the interest payments on their mortgage. Claimants were eligible if they had a mortgage and were in receipt of certain benefits such as Income Support, Jobseeker’s Allowance (JSA), Employment and Support Allowance (ESA), Pension Credit or Universal Credit and have no earned income.
But, in a little-noticed move, ministers have gone ahead with plans first devised under George Osborne and have now scrapped the payments. Esther McVey, Secretary of State for The Department for Work and Pensions, has driven the changes through.
The changes kicked in on April 6th and the latest figures show fewer than 10% of those who used to get SMI payments have taken up the new loan offered in its place. Just 10,000 out of a total of 103,000 people have taken up the loan offer, by signing and returning a legal agreement.
Shadow Housing Secretary John Healey told HuffPost UK: “Ministers’ botched cut to Government help with mortgage costs is putting thousands of home-owners at risk of homelessness. There’s been state support for low-income homeowners since the 1940s, but Ministers are now stripping away this vital safety net without any proper replacement.”
He added: “Government Ministers must re-think this cruel cut and back pensioners and other low-income homeowners with the help they need to stay in their homes.”
The DWP said that it had taken steps to ensure the vulnerable would not lose out from the change and it had sent out tens of thousands of letters and phone calls to ensure as much publicity as possible. The department pointed to statistics showing that a further 8,000 people had agreed in principle to taking out a loan. 42,000 declined the offer, and 12,000 were undecided.
It added that those already on SMI were not at risk of homelessness as they are able to reconsider their decision to decline the loan and the payment would be backdated.
