Universal Credit’s Attack on Home Owners (and who really benefits)

Many home owners, already struggling to pay mortgage repayments, may find themselves facing repossession and homelessness under new benefit rules.

Support for Mortgage Interest (SMI) payments are designed to help those who find themselves out of work – whether through redundancy, sickness or disability-  to continue to make interest payments on their mortgage.

Payments are limited to two years except for those over 60 or those judged unable to work due to sickness or disability.  Payments are currently only available to those working less than 16 hours a week and in receipt of Income Support, ESA, Job Seekers Allowance or Pension Credit.

As the recession began to bite in 2009 and house repossessions soared, the waiting period for SMI was cut to 13 weeks.  Despite the Tories plunging the country back into recession, the Tories are consulting on increasing this to 39 weeks in January 2013.

This change was quietly announced in a consultation document published at the end of last year (PDF).  It will mean householders who face unemployment will now have to wait nine months before receiving any support with housing costs.  Few mortgage companies will be prepared to wait so long before calling in the bailiffs.  The capital limit, which is the size of the mortgage that can have payments claimed against it, is to be halved from £200,000 to £100,000.

The document also reveals that the Government is considering making payments recoverable, should the householder die or sell the property.  Currently those who are long term sick, have children or are pensioners can have mortgage interest paid indefinitely.  Those who are simply unemployed have payments stopped after two years.  The Government plans to extend this two year limit to include those with children or those who have been moved from disability benefits to job seekers allowance.

The new death tax will see these payments recovered when the claimants dies.  The consultation document even reveals that the Government is considering making all SMI repayments recoverable on death.

SMI is to be bundled into Universal Credit, Iain Duncan Smith’s hugely expensive and ludicrously complex overhaul of the benefits system.  The draft regulations, which have just been published, explain how the above changes will be enshrined in law, although as yet the Government is too squeamish to tell us the exact figures.  So the Universal Credit regulations say that there “is to be a waiting period of [x] months before owner occupier claimants can receive help with their housing costs.”

It is only by referring to the previous document on SMI reform that the Government reveal their true intentions.  However the next sentence in the Universal Credit regulations do contain one key phrase which tells us everything we need to know about where welfare reform is heading:

“This is based on the principle that it is reasonable to expect owner occupiers to make some provision, whether by insurance or savings, to fund their housing costs for a period in the event of a change in their circumstances such as unemployment or sickness.”

The inference is clear.  Decent people will be expected to take out redundancy or income protection insurance as the Welfare State is whittled away.  The uninsured squeezed middle may now find themselves plunged into mortgage arrears and repossessions should they lose their job or fall ill.

This dovetails with George Osborne’s bungled Child Benefit cuts for higher earners.  The intention to undermine the Welfare State is clear.  A universal system means that everyone has a stake in the Welfare State.  This is being eroded.  When the changes to SMI are introduced – which will also see SMI stopped for those who take on a few hours of work a week whilst looking for a full time job – huge numbers of people will no longer have a safety to ensure they can keep their home should they have to give up work.

With incomes continuously squeezed and prices soaring, many families, including those with mortgages, are already close to the breadline.  Few will have the means to fund mortgage interest payments for up to nine months should they become ill or unemployed.  Those who take out income protection schemes will resent even more than now that their tax and National Insurance payments are funding a Welfare State for other people.

Of course all of this will be cheered by the insurance industry sharks who have lurked in the shadows of welfare reform.  It couldn’t be better news for the likes of Unum, the huge income protection insurance firm, who last year launched an advertising campaign for their income protection services.  A leaked powerpoint presentation shows how Unum are training up their sales force on the benefit changes they helped design, warning that “benefits will fall significantly short of what most households need to pay their bills.”

Under the current system, those on an average salary get a good deal from the Welfare State.  Income Protection schemes are expensive and far less comprehensive that the current benefits system, far from generous as it is.  As the Welfare State is further eroded then the income protection racketeers will raise prices.  The undermining of the welfare state is a huge confidence trick designed to fleece tax payers.  Insurance companies will see their profits increase with every cut to welfare, especially those which attack the slightly better off, such as people affected by changes to Mortgage Interest Support.

The end result, if they succeed, will mean people paying more money for welfare insurance than they ever paid through the tax system, whilst receiving far less comprehensive protection.

All the benefit bashing, the suicides, the disability hate crime, as well as the poverty, homelessness and ill health that has been inflicted by welfare reform has had one key aim in mind.  A big fat payday for private sector sharks like Unum.

The draft regulation for Universal Credit have just been published and are open to consultation at: http://ssac.independent.gov.uk/consult.shtml

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31 responses to “Universal Credit’s Attack on Home Owners (and who really benefits)

  1. One of the myths promulgated since the Thatcher years is that about home-ownership. In truth and legally if you have a mortgage on your home you do NOT own it, you are NOT a home-owner. Until you have the deeds and the Land Registry confirms that there are no charges against the property.you are merely the occupier.

  2. @warriet of course you are right, and a point I like to tell my friends, some of whom are now looking at a second house or upgrading. You are basically signing a 25 year employment / debt slave contract where you are primarily working for the bank, all other concerns become secondary.

    The other unfortunate outcome of getting into bed with a bank for 25 years is that as the markets change, as you have paid more money into the mortgage, you become a target for the bank. At that point you are sitting on wealth that, with a few change of terms, can be legally taken from you, leaving you with nothing.

    Its not really happened in this country as of late, especially with SMI and other programmes but look towards the US to see how they even went after people with no mortgage and no debt and tried to take their houses.

    But remember the endowment mortgages that never worked, the interest only ones that cannot be refinanced, peoples savings wiped out because they were sold a dodgy investment rather than just a basic straight forward mortgage.

    Given time, and another Tory government, you will see a lot of people losing their houses.

    • @matt Thank you for this, for agreeing with me. Sadly there is no need to wait until 2015. There are projected to be another 500, 000 homeless by the end of 2013 and they will not all be the undeserving poor[sic] already written off by the Government and what is ironically called the Opposition. There will be swathes of the ‘intentionally homeless’ who will discover that not everything they read in the Daily Mail or were told by the BBC is true:(

  3. I wrote about this, and modelled the effects on equity, several months ago in my welfare reform blog http://blog.cix.co.uk/gmorgan

    What’s really worrying in the draft UC regs is that there will no mortgage support for people with ANY earnings.

  4. Great article. Insurance companies in general usually exploit loopholes and come up with excuses not to pay out too, so a lot of people are going to get stiffed when they need to claim.

  5. Unum have a long history of not paying out, just Google for Unum scandal to see page after page of search results about it. When they don’t pay out, people who’ve lost their livelihoods will end up homeless anyway as most won’t have any money to take Unum to court and there’s no legal aid for it very soon.

  6. Are we supposed to feel sympathy for these middle-class Daily Heil reading cunts who cheer on the destruction of the Welfare State conveniently forgetting what they themselves take from it. The fuckers are also paid their mortgage interest at a “standard rate” so smarmy cunts on Bank of England “life-time trackers” are really coining it in. Putting the boot into cunts who cheer on the boot being put into the less fortunate is one thing we should be fully support this evil government in. Another thing that needs the boot putting into is “but-to-let” scum landlords and their fucking “portfolios”. First they came…

    • “He that diggeth a pit shall fall into it; and he that rolleth a stone, it will return upon him”.

    • The Daily Mail reading, self-righteous bigots, support and enable the silver-spooned, silver-tongued sociopathic Tories and cheer them on every step of the way in their mission to destroy the Welfare state, because they think it will only hurt the poor and they love that idea and they think the money seized from those who have next to nothing and need it most, is going to be given to them in tax cuts.

      When what they enjoyed happening to others happens to them, they will weep, wail and whine “but I did everything right, this shouldn’t be happening to good people like me!” and “this country didn’t used to be like this, how could this have happened?!” well, the answer will be, it happened because of you.

      • Marie Antoinette

        Let them eat cake :-)

        • Marie Antoinette,
          Not everyone with a mortgage is well off, or a Daily Mail reading Tory bigot. Divide and rule is a Tory trick and you are falling for it with what
          you write and feel. Don’t let them divide us against each other!

          Martin

    • Hell in a handcart

      As the poor and unfortunate (stoically) take their medicine so can these cunts. I’m sorry, but I really couldn’t give a fuck about “home owners” and their fucking “struggle”. The sooner these cunts are destitute he better! Hell mend ‘em!

  7. Your prognosis on the future of the Welfare State is spot on, Johnny :-)

  8. should be more like :-(

  9. A logical next step would be for the govt to make it compulsory for all home-owners to take out some form of income protection, deducted at source perhaps as NI is now. No doubt it would prove as worthless as NI is proving now, but it would serve its purpose which seems to be (in a famliar pattern) turning the general population into an income stream for predatory companies.

  10. Eric Greenwood

    SO you have a lot of houses then, unable to be sold because less people are working.. so what is going to happen to this stock.. sold back to the government, then right to buy.. then when they cant afford it. repossessed, sold to the state and so it begins again,

    • No, will not go back to the state but the land which the houses clutter will end up(back) with the landed classes who will doubtless find a right and proper use for it.

  11. I did take out insurance against unemployment. When I was made redundant, it took them four months to pay anything and then only lasted six months. I’m still unemployed and as I’m over 50, on the scrapheap. I only survived by doing a pointless college course and getting myself 10k in student loan debt in the process. It was better than the dole. But now I’m back on SMI (which only accounts for half the mortgage payment anyway) and on borrowed time. My savings are slowly disappearing. Can’t see how I’m ever going to make it to retirement without going under.

  12. Avenging _Angel

    Thanks for the link Rogr – it was chilling reading, but with an objective feel.

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  18. https://www.facebook.com/groups/antibedroomtax/

    here to fight againt unjust taxes on the poor , please join the group

  19. it’s getting scary out there – it’s not like the insurance companies actually pay up anyway – have person experience of Unum and their ‘bad faith claim’ behaviour :-(

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  22. well when they stop paying my mortgage interest next month(which is £139 per month) and i get my home repossessed, i will then be forced to rent with my 4 children and apparently then they will pay my rent which approx will be £4-500 per month !!!!!!!!!!!!!!!!!!!stupid

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