Skip to content

Mortgage Aid Cut Will See Disabled People Lose Homes

August 9, 2010

Almost 65,000 disabled people, including those with profound mental health problems, are at risk of losing their homes because of a cut in mortgage payment support for vulnerable people, according to the body representing housing associations.

The benefit, which pays the interest on a mortgage, is to be reduced from its present value of 6.08% to what the government says is the Bank of England average mortgage rate of 3.67% – a cut that means a loss of £1,300 annually for every £100,000 borrowed.

The National Housing Federation says that at least 64,000 people will be at risk of falling behind on payments, with those affected struggling to “keep up with their mortgage payments, falling into arrears and eventually losing their home”.

Ministers announced the cut in interest payments in the June budget as a part of the deficit reduction programme, but the federation argues that the coalition has yet to publish a comprehensive assessment of how the changes will affect those with disabilities – undermining government claims that it would shield the poorest from cuts in public spending.

Experts said the savings, estimated at £60m, are tiny compared with the size of the welfare budget of £87bn. But the Department for Work and Pensions said the current system meant 92% of recipients receive more help than they need.

The federation’s chief executive, David Orr, said that this was a “particularly harsh way to try to bring public spending down”. He added: “The government says that it will try to protect the most vulnerable as it makes spending cuts, but this policy will hit thousands of people with disabilities, cutting off many from the prospect of owning their own home.”

Around 59,000 disabled people use the benefit to help them pay mortgages on homes they have bought. A further 5,000 people with profound physical disabilities and mental health problems have used the state payments to secure niche mortgages to pay for shared ownership homes – provided by housing associations – through which buyers purchase a fraction, usually more than a quarter, of the property and pay rent on the rest.

Since many of the claimants would not qualify for the best deals from high street banks, the scheme allows them to access rates which are comparable to those available to people who are not disabled. At 6.08%, the interest support compares favourably with the starting rate of 6.49% offered by Countrywide, Britain’s largest estate agency, for the most common mortgage taken out by customers last month.

Most of those who take up the benefit are first-time buyers with a total household income of less than £60,000. A sizeable minority are home owners who can show that their houses are no longer suitable for their needs. They may have long-term support needs, have a full-time carer, or need to live close to a medical facility.

In many cases the decision to curb the payments from October will strip from the most vulnerable a chance of leading an independent life.

Gloria Cornwall’s 23-year-old daughter, Faith, was planning to move to a two-bedroom flat with a full-time carer as part of a shared ownership scheme with a housing association in east London. The mortgage the family had secured was £100,000.

Mrs Cornwell said: “Faith was born with Down’s syndrome. She needs full-time care. I am 68 and my husband 72. Our health is failing and this was a chance for Faith to live on her own. We won’t be here forever. How can the government just take this away? We do not understand it.”

Helen Goodman, Labour’s frontbench spokeswoman on housing benefit, said: “Once again we see the terrible effects of the coalition government’s ill-conceived and crude approach to cutting public spending regardless of who it hurts. In the case it is the most vulnerable.”

No comments yet

What are you thinking?

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: