Housing benefit warning and bad news for homeowners

‘Shelter has been calling for housing benefit reform for years, but this debate must not be muddied by the use of an extreme example from one area in the country.1

‘The vast majority of housing benefit claimants are either pensioners, those with disabilities, people caring for a relative or hardworking people on low incomes, and only 1 in 8 people who receive housing benefit is unemployed.2

‘We are really concerned that even at current levels, nearly half of local housing allowance claimants are already making up a shortfall of almost £100 a month to meet their rent.3 If this support is ripped out suddenly from under their feet it will push many households over the edge, triggering a spiral of debt, eviction and homelessness.

‘The underlying issue which this budget has failed to address is the critical shortage of affordable housing, which means more and more people are being housed in the private rented sector where rents are almost double those in social housing.

‘If we are to reduce the housing benefit bill in the long term we must continue to build more affordable housing.’

The Government’s plan to pay Support for Mortgage Interest (SMI) at the same rate as the Bank of England monthly rate is bad news for struggling homeowners, Robb also said.

‘This is not good news for those struggling homeowners who are just about managing to keep a roof over their head thanks to the support they are getting through SMI, not to mention the thousands of homeowners who will potentially need help in the coming months.

‘SMI has been one of the key schemes in helping hold back the rising tide of repossessions. But the reality is that most people on SMI are on higher than average interest rates, so there is a real danger it will no longer help the people who need it most and could trigger a surge in repossessions.

‘Introducing a system where rates will change monthly will create additional uncertainty for thousands of people already struggling day to day. The only solution is to ensure that SMI is paid at the rate of interest that people are currently being charged.

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