Boris Johnson announces ‘brick benefits’ mortgage scheme in housing rules overhaul

Families and low-wage workers will be able to use the benefits to save deposits and make mortgage payments, Boris Johnson has announced. The Prime Minister revealed the plans in a speech in Blackpool just days after surviving a deadly vote of confidence in his leadership.

Mr Johnson has pledged to turn ‘benefits into bricks’ – changing welfare rules so that the 1.5 million people who work but also on housing benefit have the choice of using it for a mortgage, rather than automatically going directly to private owners. and housing associations.

The UK government will launch a review of access to mortgage finance for first-time buyers, with the aim of facilitating wider access to low-cost, low-deposit finance, such as 5% down mortgages . He will report back in the fall.

Two and a half million tenants who rent their homes from housing associations will also have the right to buy them directly. Mr Johnson said: “We will continue to insist… that there is individual replacement so that when sales are made you use the receipts to build more… We want to see at least one replacement.”

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But plans to disrupt home buying will require careful consideration and serious investment, housing industry experts say.

Paul Coss, Chief Client Officer at digital mortgage broker Haysto, said: “The new housing benefit payment proposal presented by Prime Minister Boris Johnson today will help lower-paid workers who can use their benefits to contribute to the cost of getting onto the property ladder.

“Until recently, housing assistance – which costs the government £30billion a year – could not be declared as income for a mortgage, making it difficult for lower-paid workers to easily climb the levels of ownership.

“With the Right to Buy scheme also being extended, having first been introduced by Margaret Thatcher, it will also allow housing association tenants to buy their homes at reduced rates.

“While these are all positive steps to help low-wage workers move up the homeownership ladder, there are concerns that this program may not help in real life. To qualify for Universal Credit, people must have less than £16,000 in savings, which will prevent people from having enough money to put down a deposit.

“Furthermore, there are previous concerns about the supply of social housing and the possibility that such a policy could deplete the housing associations’ vital stock of properties, which can only be sustained if the government makes a similar comparison, one-for-one replacement system.

“So while the program looks really promising, it’s important that low-wage workers receive the right support to get on the property ladder and the program will only be successful if lenders actually commit to the program.”

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Charles Roe, director of mortgages at trade association UK Finance, said: “The mortgage industry recognizes the importance of home ownership and today’s Prime Minister’s announcements could help more people to achieve their dream of owning their own home.

“Companies are committed to lending responsibly, with regulatory rules in place to ensure mortgages are affordable – it will be important to carefully consider any changes to ensure they deliver good results for customers while throughout the term of the mortgage loan.

“We look forward to discussing the proposals and will continue to work closely with the government to help more people move up the housing ladder.”

Tim Bannister, Director of Real Estate Science at Rightmove, said: “If a review of the mortgage market could help address the challenge of needing such a large deposit, it would be very much welcomed by those in a position to demonstrate that they can afford monthly payments, but are currently locked out of homeownership.

“It is clear to see why there are many tenants eager to move up the ladder, as they are paying 40% more each month than 10 years ago, when low interest rates mean that payments average mortgages have only increased by 11% compared to this same time.

Alicia Walker, Head of Policy, Research and Campaigns at Centrepoint, said: ‘If the government is serious about turning ‘benefits into bricks’, we need to see a serious level of investment in truly affordable social rental housing.

“We support measures to improve home ownership, especially for young people, as rates have come down significantly over the past three decades. However, it is not clear how much this will really support people. in need.

“In addition, extending the right to buy to housing associations risks further eroding the social housing stock, which many young people desperately need. have not been kept.”

Kiran Ramchandani, director of policy and external affairs at Crisis, said: “This ill-conceived announcement is the exact opposite of what we need to tackle the growing housing crisis. For decades, our housing stock benefits has been laid bare…to suggest that money can be used to secure mortgages without a costly investment in the benefit system is a mistake.

“The only way to fix our broken housing system is to build more homes than people can afford – we urge the government to keep going if we are ever to end homelessness for good.”

Dan Wilson Craw, deputy director of Generation Rent, said: “Neither reviewing low deposit mortgages nor extending the right to buy to housing associations will solve the shortage of homes we need in places where people most want to live.

“For this, we need a social housing construction program beyond the individual replacement of homes purchased under the right to buy.”

Polly Neate, Shelter’s chief executive, said: “The Prime Minister’s housing plans are confusing, unworkable and a dangerous gimmick. Reckless plans to extend the right to buy will further jeopardize our supply of rapidly shrinking social housing.

“The math doesn’t add up: why try to sell the few truly affordable homes that are left – at great expense – when homelessness is on the rise and more than a million households are stuck on the waiting list ?

“The government needs to stop wasting time on the failed policies of the past and start building more of the safe social housing that this country really needs.”

James Andrews, personal finance expert at Money.co.uk, said: “Boris Johnson shamelessly dives into Margaret Thatcher’s ‘greatest hits’ catalog to bolster backbench support after vote of no confidence damaging this week.”

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