EPC and 'Benefits for Houses'.

[nukecad]

I've just been answering a housing question on the disability forum, (private rental, unaffordable rent increase, they're going to have to move).
When something clicked in my head and started joining dots......

My thinking goes like this:

• We know that some current rental properties will not be able to meet proposed new EPC requirements and so will be sold off, - but who's going to buy them?
• Now along comes plans to let some people use benefits to pay a mortgage and buy a property, - but where will the properties come from?
• Oh look, just coming to market are all these ex-rentals that can't be brought up to minimum EPC (without spending a fortune on them).

So we have two seperate policies that each when taken on their own look stupid, - but if you consider them together they start to look like seperate parts of a bigger plan.

Let benefits tenants in below EPC properties use their benefits to pay a mortgage, and buy the landlord out rather than paying him rent.

• It doesn't cost the Government/DWP/ultimately the Taxpayerr any more, they were paying the money towards the rent anyway. They are just giving it to mortgage companies rather than private landlords.
• The ex-tenants are happy, they have a property not a rental and they are not bothered about the EPC.
• The government can claim they have improved things for renters, the remaining private rental stock all becomes above minimum EPC.
• The ex-landlord has got money (maybe even market rate) for his otherwise difficult to sell property.

Yes it's forcing some 'lower end' landlords out of the rental game, but I suspect that will be mostly single property landlords and many won't be too sad about that.

Of course there will then be problems with defaulters and reposessions, there always is. But that just puts the property back on the market at a knock down price.

There will also always be the perception that benefits should not be used to buy a property.
But when you consider the points above it's not costing the taxpayer any more, the mortgage lenders gain that taxpayer money, the private rental sector loses it.

Is it unfair to workers not on benefits? Yes but:
Most low paid workers are already on benefits - Working Tax Credits, Child Tax Credits, Housing benefit - those will be more recognised as benefits as they all migrate and become UC.
"Fairness" has never had much place in government policy. (They spout about it but it's just spouting).

Overall it's a combined policy that looks like a winner to any government.

[jpkeates]

Your thinking is more joined up than this government could ever be.

For a start, the EPC C thing is either going to be in the new renter's reform bill or it isn't.
Otherwise, it was a private members bill that had government support, but the member who's bill it was is now dead and it's not in any of the briefing materials about the new bill so far.
So that might already be dead.

The idea of benefits paying mortgages is a pipedream.
There's no intention (as far as I can see) for the state to guarantee or incentivise lenders to make this kind of loan, and, so the proposal doesn't actually change anything.
There are some lenders who already include some benefits in affordability criteria.
The main obstacle to people who want to buy with a mortgage isn't just income, it's the deposit.
As savings reduce a number of benefits (eventually to zero), only some savings (like the old help to buy ISAs) would have to be carved out.
And that's a huge opportunity for abuse - because a help to buy ISA was just an ISA until you bought somewhere, so some kind of magic would have to happen.

The whole announcement falls apart when you look at it.
But it served its purpose - people have a vague memory of the PM helping people buy homes.

[jpucng62]

Your thinking is more joined up than this government could ever be.

For a start, the EPC C thing is either going to be in the new renter's reform bill or it isn't.
Otherwise, it was a private members bill that had government support, but the member who's bill it was is now dead and it's not in any of the briefing materials about the new bill so far.
So that might already be dead.

I believe there is a Govt bill coming - the private Members Bill was just a way of trying to speed things up. EPC is not, unfortunately, dead in the water but alive and kicking - just waiting of the Govt to get round to it!

[nukecad]

The only 'real' proposal I have seen regarding 'benefits for houses' is in fact a provision that savings for a deposit that are 'ringfenced' in something like a 'deposit isa' would be disregarded for IR benefits purposes.
The government themselves have admitted that very, very few benefits claimants will be eligible for the scheme, if it does come in.

As you say both are proposals that might never happen, or if they do won't be in the form that many are speculating about them.

The above was meant as an interesting thought excercise to show how two ostensibly bonkers policies, made at different times, can somehow make sense if/when considered together as one plan.

This government does have a habit of making vauge announcements, with no real plans or details behind them, which just gets everyone speculating ( and sometimes panicing) unnecessarily.

PS. Don't be fooled by ministers incompetence, even Boris, there are some pretty clever thinkers/schemers behind the scenes.

[Hudson01]

IWe know that some current rental properties will not be able to meet proposed new EPC requirements and so will be sold off, - but who's going to buy them?

That is an easy one.......... First time buyers will buy them all up and still need more !, if the new EPC C comes in it does not affect home owners, just landlords in the PRS.

And as said abouve, i do not believe that benefits will be used so that the work-shy will be able to purchase a house, if that were to happen then the message that gets sent out is that working to own your own home is just one route to use, the other route is to sit on your back-side and let the tax payer buy you a house....... that will never fly.

[nukecad]

I've just been answering a housing question on the disability forum, (private rental, unaffordable rent increase, they're going to have to move).

Just an update to that one.

The T emailed/talked to their LL, who subsequently instructed their agent to take no action on the s13 and further to issue a new TA with a 12 month Fixed Term at the current rent with no increase.
T has now received that new TA.

So what initially looked like an 'ogre' multi-property (100+) LL turns out to be one of the good guys.

Happy T, who is now looking for somewhere else affordable to rent, and has at least 12 months to do so without the worry of eviction hanging over them.
Pretty sure that if they find something within the 12 months their LL will then agree to a surrender.
(They're probably going to have to move out of London to find something affordable).

[Hudson01]

That looks like a good outcome and as you say one of the good guys, i agree that the LL sounds like they will let the tenancy be given up with no penalty if the tenant finds something else..... lets face it, it will rent very quickly given the current market.

[nukecad]

Yes, and given the rent T is used to paying in London it should be easier to find something affordable elsewhere, as long as T can find another decent LL and get past the 'No DSS' barrier, which TBH is going to be a bigger problem than affordability for them.

[jpucng62]

That's a story that will never make the news - LL does the decent thing! Goes against the narrative

[nukecad]

Terrasa Coffey has clarified a bit about the new benefits for houses in an interview with the Works and Pensions Select Committee last week:

What we have just announced recently, which we need to bring into action, is this new policy that we will bring in place where, if you are saving for a house in an approved product—a Help to Buy ISA or LISA—that will not be regarded in terms of capital, because we thought that was a wrong incentive.

So as thought it's going to be simply that ringfenced savings towards a deposit will be disregarded as savings/capital for means tested benefits calculations.

So hardly a new policy just a re-hash of the old help to buy ISAs, but this time being ignored for benefits rather than the government adding a 25% top-up.

[jpucng62]

Govt rehashes policy - announces with big splash and no new money. No news then!

[nukecad]

More on the 'Benefits for houses' proposals.

This is from the July 2022 LA Welfare Direct bulletin which was issued yesterday for all local authority housing staff:
https://www.gov.uk/government/public...e-direct-72022

20. On 9 June 2022 the Prime Minister announced a broad package of measures that will improve access to home ownership.

21. The government recognises it may be challenging for low-income households on welfare to save, particularly in the current climate, but we want to remove barriers and support homeownership.

22. The package included four DWP measures:

• Local Housing Allowance for those buying a new home - We will look to change welfare rules so that people who receive housing support can use their benefit towards mortgage payments for a new mortgage instead of on rent. Under these proposals, claimants moving into home ownership will receive the lower of their mortgage payment or the Local Housing Allowance for the area they live in.
• Change capital rules for housing support - We are already encouraging young people to save for a home of their own though a lifetime ISA (Individual Savings Account) but penalise them for it if they need financial support. We will explore exemptions for Help to Buy and Lifetime ISA savings from eligibility rules, so that claimants will no longer be discouraged from saving towards their first house.
• Support for Mortgage Interest - We are also extending the support for existing homeowners to better support work incentives and provide support sooner to ensure homeowners have better protection against repossession, by making changes to Support for Mortgage Interest (SMI) entitlement. This measure will reduce the qualifying period for SMI from nine months to three months and remove the ‘zero earnings rule’ in UC.
• Exploring ways to use housing benefits bill more effectively - The government will also explore innovative ways to use government guarantees to bring forward a new supply of homes.

23. Some of the finer details, including the impact on HB entitlement, for these measures are still being worked up and agreed.

24. We will keep you informed as work progresses.

So it's not just the ISA savings disregard that they are proposing, there's also a proposal to continue paying LHA rate towards a mortgage if someone already getting it moves from renting to buying.

That still looks fairly reasonable to me as long as it's only LHA rate that will be paid to the claimant towards a mortgage rather tha towards rent.
Lets face it a mortgage will eventually be paid off, rent is forever.

[jpucng62]

So it's not just the ISA savings disregard that they are proposing, there's also a proposal to continue paying LHA rate towards a mortgage if someone already getting it moves from renting to buying.

How can anyone entitled to claim LHA possibly afford to buy a house - it is incomprehensible to me!

[SouthernDave]

How can anyone entitled to claim LHA possibly afford to buy a house - it is incomprehensible to me!

your not the only one. I dont understand how anyone who’s doesn’t EARN their money can buy a house.

[nukecad]

Many people who EARN low wages are entitled to claim Universal Credit Housing Element, (or Housing Benefit if they have been claiming for a number of years), at LHA rate.

Despite what some of the right wing media would like have you believe there are more workers claiming benefits than non-workers.
Universal Credit, Working Tax Credit, Child Tax Credit, Housing Benefit, all are benefits claimed by workers.

The govt. is paying that money out anyway.

So does it really make any difference if it goes to a landlords pocket or to a mortgage lenders pocket?
Unless you are that landlord of course.

LHA rate is unlikely to cover the full mortgage repayment, so yes they will have to be working/earning as well as claiming benefits.

One thing the proposals might do it get rid of the 'No DSS' rental block on those with low incomes.
If a landlord won't take a tenants benefits then the morgage lenders will be happy to.
(And yes, it is going to lead to quite a few reposessions if/when they don't keep up the payments).