Reform housing support or face a tidal wave of repossessions, think tank warns

Linda J. Dodson

Repossessions could spike unless government housing support is urgently reformed, a think tank has warned.

The Centre for Policy Studies urged ministers to immediately overhaul the Support for Mortgage Interest scheme to prevent a wave of low income households losing their homes.

The SMI scheme allows people who receive benefits such as Jobseeker’s Allowance, Universal Credit or pension credit to receive contributions towards their mortgage interest payments.

The Government pays these direct to the lender in the form of a loan, which the homeowner has to repay with interest when the property is sold (or via voluntary repayments before then). If they do not have money left over after paying off their mortgage, the debt is written off. 

However, for people receiving Universal Credit to qualify, they have to have been signed on for nine months while earning no other income. The loan payments are withdrawn if the homeowner takes on work.

This means that if any of the estimated three million people who are still on furlough lose their jobs when the scheme ends in October, they will only be eligible for SMI next summer.

According to the Joseph Rowntree Foundations, a charity, which supported the report, one third of those in poverty are owner-occupiers. Nearly half (42pc) of mortgaged homeowners have no savings at all.

Even those who are then protected by the new Job Support Scheme could struggle to pay their mortgages with their income reduced, the CPS said.

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