From Mortgage Strategy*:
The Support for Mortgage Interest scheme, due to expire next month, has been extended until March 2015.
Borrowers [who have been unemployed for more than] 13 weeks are currently eligible for the support, which replaced the 39-week [waiting] period in 2009, and the qualifying loan size increased [from £100,000 to £200,000]. Both were due to revert back [to the old limits] in January 2013...
CML director general Paul Smee says: "We welcome the extension of the current arrangements for the support for mortgage Interest scheme until March 2015. These had been due to expire in January 2013 but today’s announcement provides a welcome extension of support for homeowners currently receiving income related benefits, as well as helping lenders to extend forbearance to those waiting to qualify."
* Via Dill at HPC.
Meh
1 hour ago
29 comments:
We have a system that provides indefinite benefits and subsidies for people in council and rented housing. Surely it is only reasonable and compassionate to provide a safety net for a responsible self-reliant family (who may be no better off than the other group) but who have done what they can to provide for themselves but temporarily hit hard times through illness or redundancy?
While I know you are anti home ownerist because we are all awful NIMBYs and have made indecent capital gains by buying up property and disadvantaging the young I am surprised that you would object to hepling a decent family through a crisis. Would you rather a family were made homeless and thrown out on the street?
W42, I [don't] like the way you make these incredible leaps of logic from "Wadsworth is against taxation of incomes and subsidies for landowners; therefore he is a heartless git who wants to make people homeless".
That £200,000 x 3.6% interest subsidy is enough to cover the costs of BUILDING AND MAINTAINING a council house.
If people are happy to be council tenants, low risk but no windfall profits, then fine. At least that means there is no private tax collection by landlords and bankers. The benefit goes straight to council tenants in lower rents.
And if people want to be land speculators, then let them take the downside as well as the upside.
The Home-Owner-Ist view is that council tenants are scum and that they themselves should be bailed out. Why is £140 a week a waste of money if an unemployed person gets it, but a splendid investment if it is a subsidy to land speculators and ultimately bankers?
Try being intellectually coherent, plz.
Which is fine in the long term. Problem is that if a home-owner loses his job today, gets turfed out of this home in three months and goes to the council and says "that mortgage interest benefit the government just got rid of, well I need a council flat pronto" he's not going to find himself in a council flat this side of Christmas 2017 is he?
BE
BE, transitions are always tricky.
But whose idea was it to stop building council houses (or to sell off a lot of the existing ones)?
The Home-Owner-Ists, that's who. So they can get a taste of their own medicine. It's the only way they'll ever learn.
Except the people who cheered on the home-ownerist conspiracy in the 1970s are unlikely to be the ones now losing their homes due to the downturn, are they? They've already had their windfall and retired.
I thought you supported young people?
And you are now suffering from exactly the same logical incoherence you attacked Woodsy for. You say "homeownerists... taste of their own medicine", is now owning your own home automatic qualification in your hated group?
BE: "Except the people who cheered on the home-ownerist conspiracy in the 1970s are unlikely to be the ones now losing their homes due to the downturn, are they?"
That is unfortunately true. So let's fund SMI with a levy on all homeowners.
"You say "homeownerists... taste of their own medicine", is now owning your own home automatic qualification in your hated group?
1. Nope, I'm all in favour of owner-occupation, that's the whole point of LVT.
2. I want there to be as many genuine owner-occupiers as possible and as few land price speculators as possible.
3. Having a secure council tenancy and paying rent is much the same as buying a cheap house and paying LVT, with no possibility of making a windfall "capital gain".
4. The people I hate are the subsidy junkies - the banks are behind SMI, as the quote from the CML says.
5. Home-Owner-Ism is the main reason for high unemployment.
Recessions and high unemployment are the inevitable flip side of credit bubbles and busts and high taxation of output and employment.
So as usual, the Homeys have painted us into a corner and the only way out, according to them, is even more Home-Owner-Ism.
"We have a system that provides indefinite benefits and subsidies for people in council and rented housing."
Apart from the point that council housing is not subsidised, unless the tenant is on the dole and a fair proportion of council tenents are not on the dole, despite what the Daily Mail would have us believe, mortgage interest relief makes some sort of sense, if the alternative is housing benefit, but that's just comparing one bad system with an equally bad one.
A better arrangement, if the idea is to prevent evictions, is to make the banks roll up the interest during the period of unemployment, so no-one gets a free ride and no-one gets evicted, but hey, then the banks get less taxpayers' money for doing f all and that would never do.
B, yup, agreed and seems fair.
I think I am being completely coherent. We have a welfare system to help the needy. One of the basic necessities of life is somewhere to live.
The welfare system therefore helps some people who are in need by subsidising or providing rental housing.
But the system also requires that those who can afford to buy a house should do so and be self reliant.
You are the one always bleating on about 'I own land give me money' as though homeowners deserve nothing. Please don't try and deny it - you use it as a heading every week.
But that's not what this benefit is about. It's about helping people to keep their home by paying limited interest charges when they hit a temporary crisis. These are not land speculators or elite moguls they are just ordinary mortgage loaded families doing their best to get by.
So I'm asking why you think the rental sector deserve help when they are in trouble but a responsible self-reliant mortgage payer doesn't - simply deserves your rather snide 'I own land give me money' refrain?
"But the system also requires that those who can afford to buy a house should do so and be self reliant."
Oh no it doesn't. Popular opinion, which wrongly looks on council housing as some sort of subsidised assistance to the poor, requires that, the system doesn't. Anyway, tenants aren't benefitting from tax-free capital gains while they get their housing benefit, unlike homeowners getting mortgage interest relief.
Paul Smee brief biog:
http://www.cml.org.uk/cml/media/press/2958
A professional privatised quangoista?
W42:
"One of the basic necessities of life is somewhere to live.",
Agreed. That is stating the obvious. So why do the Homeys HATE council housing and new construction and LOVE high rents and high prices?
"But the system also requires that those who can afford to buy a house should do so and be self reliant. "
Yes, with the emphasis on "self-reliant".
"So I'm asking why you think the rental sector deserve help when they are in trouble"
I certainly do not! I am totally against Housing Benefit payments to private landlords and have never said otherwise.
So I am completely intellectually coherent and consistent, Home-Owner-Ism is a mass of lies and contradictions and saying one thing but meaning something opposite.
B: "tenants aren't benefitting from tax-free capital gains while they get their housing benefit, unlike homeowners getting mortgage interest relief."
Exactly. More to the point, owning a council house is not leveraged land speculation - even if the rents are "below market rate", so what? As long as they cover the cash costs, that is the main thing. And the bankers can't tap into the rental stream.
L, banks own land (indirectly), give them money.
W42: if people fall on hard times, wouldn't it be better to give them money? Why a programme for those who have mortgages?
W42: if people fall on hard times, wouldn't it be better to give them money? Why a programme for those who have mortgages?
"those who can afford to buy a house should do so and be self reliant."
Oh no it doesn't. "
But it does Bayard - unless you move to a system where the state owns all housing some people have to buy privately, and that's ignoring the reality that there are waiting lists for all social housing anyhow so if (say) you move for a job there isn't a choice except to buy. The state can't afford to provide all the country's housing and when they do - I believe the USSR had such a system - it wasn't popular.
Why a programme for those who have mortgages?
Because they are (in general) most at risk from being made homeless. Yes it probably would be better if banks were forced to factor in such emergencies and provide a payment holiday, or unemployment benefits were better or indeed if illness insurance were worth the paper it was written on, but that doesn't happen.
"HATE council housing and new construction"
I don't. My attitude here has nothing to do with prices, land values, subsidies, the lack of subsidies or speculative factors.
Simply that families with mortgages and an unexpected crisis like redundancy face being homeless, therefore a welfare safety net needs to address that situation, this is one way to do so.
"tenants aren't benefitting from tax-free capital gains"
Nor have home owners outside London over the past 5 years, and anyone who bought since 2008 (ish) is probably holding a loss, and they likely won't gain over the next 5 years either. They still have to live somewhere and that's what houses are for, so what's your point?
" I am totally against Housing Benefit payments to private landlords"
So you would help people in social housing (because they will not be thrown out) but do nothing for equivalent private tenants in difficulties or people with mortgages?
W42: "So you would help people in social housing (because they will not be thrown out) but do nothing for equivalent private tenants in difficulties or people with mortgages?"
I'm not sure what level of reality you are operating on here.
When you say "help" I take it you mean "give money"?
And please, can you point out to me where I ever said that social housing tenants should be given money?
"But it does Bayard - unless you move to a system where the state owns all housing some people have to buy privately"
Er - private landlords? And just because if you want a house, you have to buy privately, doesn't mean there is any moral, ethical or legal obligation to buy instead of rent.
I'll have one more go!
Bayard. I'm not talking moralty or what could be arranged in a better world I'm talking reality and pragmatics, here and now. If you need to move to a different area, for job, family or whatever, you will find you can't get social housing because it's oversubscribed. Your choices are therefore rent privately (and effectively buy a house for the buy-to-let landlord) or (if you can) take out a mortgage to buy, and with it the risk of losing that home if something goes badly temporarily wrong financially. Are you suggesting that such people should not be helped by the welfare state because they have somehow put themselves outside it by having made private arrangements?
"I ever said that social housing tenants should be given money". You didn't, and they aren't in ordinary circumstances, but pragmatically that group is more protected from the money grabbing antics of private landlords and banks. I have not heard of many social tenants losing their home because of sudden redundancy or illness, something that's not uncommon in private rentals or morgage foreclosures. They will have a hard time of course, but remain on the housing lists and keep their home.
W42: " I'm talking reality and pragmatics, here and now."
OK, try this: if people lose their jobs, the bank is simply prevented from charging interest or demanding repayments for the first ... months of unemployment? Or as Bayard says, the bank rolls up the interest. There are two parties to the mortgage, the borrower and the lender and one or other of them has to bear the losses.
"Are you suggesting that such people should not be helped by the welfare state because they have somehow put themselves outside it by having made private arrangements?"
I'm all in favour of having a welfare state and old age pensions and so on. But I prefer universal benefits which everybody gets, rich or poor, lucky or unlucky, hard working or lazy. I don't like earmarked benefits or subsidies for specific industries and I despise subsidies for land ownership most of all.
"I have not heard of many social tenants losing their home because of sudden redundancy or illness, something that's not uncommon in private rentals or morgage foreclosures. They will have a hard time of course, but remain on the housing lists and keep their home."
Correct. And that sounds like a very good arrangement for a lot of people (I'd be happy to live in a council house). So why are the Homeys so against it?
W42: "but pragmatically [council tenants are] more protected from the money grabbing antics of private landlords and banks."
Exactly! That's the beauty of the system! If we all lived in council housing there'd be a bare minimum paid in rent or interest, the govt would get more in rental income so would need to collect a lot less in income tax, so people would be able to spend more of their earnings on goods and services, so there'd be less unemployment, the economy would be doing about one hundred per cent better than it is.
And council housing is like a rough and ready kind of LVT-CI system. Instead of paying full rent and getting a Citizen's Dividend, you just pay a lower net rent. That's what I want for EVERYBODY (including home owners), I'd rather extend this to home owners as well than take it away from tenants.
"I'd be happy to live in a council house). So why are the Homeys so against it?"
OK - some off the top of my head reasons:
It's restrictive and hard to move to a different area.
You can't personalise a rented house or adapt it as needs change.
People are not so incentivised to do their own maintainance or DIY repairs and those costs are therefore thrown on everyone and subject to governmental/council inefficiancy.
People have a deep rooted need for security. For many of them owning their home is of prime importance.
Some people will sacrifice day to day luxury for a 'nicer' house, others may choose a more lavish lifestyle but care less about their house. Private ownership allows these choices.
Social housing is designed on a 'one size fits all' design philosophy. Some people want to be more individual and will value specific features, or not care about other design values that are standard in social housing.
You can't run a business from social housing.
That's just a start.
W42, most of the restrictions you mention arise from the fact that the Homeys have ensured there is insufficient supply of council housing.
There is no reason in principle why councils can't behave like private landlords (or a hybrid, like housing associations) and offer a wider variety of housing to suit all tastes and pockets. And if the waiting list gets too long, they can either bump up the rents or just build more, the same trade off as a private business makes.
"People are not so incentivised to do their own maintenance or DIY repairs and those costs are therefore thrown on everyone and subject to governmental/council inefficiency."
That can be easily fixed - offer people discounts on their rents in exchange for them doing their own repairs and improvements. My grandparents lived in the same council house for sixty years and did a lot of improvements in the garden and did their own interior decorating.
Ultimately - and we are getting on to LVT here - the council could say "We'll rent you a plot with utility connections, you pay the site rental value and what you build on it is your business". The Citizen's Dividend or LVT rebate is a known figure, so if you choose something where the site rent is the same as the LVT rebate, effectively you get it for free.
"People have a deep rooted need for security. For many of them owning their home is of prime importance."
Yes but we covered that!
What is more "secure', a council tenancy where you won't get booted out if you lose your job, or being a mortgage slave where people go running to the taxpayer crying out for cash subsidies (which ultimately only benefit the banks) to pay their mortgages when they lose their jobs?
This "security" thing is a key part of Home-Owner-Ist group think. you might as well say "My right to vote is not secure because I cannot buy or sell the right to vote". Nope, the rules are that everybody gets a vote from age 18 to when they die. That's as secure as anything will ever get.
So it all depends on the exact rules.
"You can't run a business from social housing."
I think you'll find that most homes built in the last 100 years or so are subject to restrictive covenants which say that the house can't be used as a place of business. The fact that many people ignore this and the neighbours do not complain is a separate issue.
And what about Crown Estates which owns lots of office blocks and so on? People can run businesses from there, can't they?
That can be easily fixed - offer people discounts on their rents in exchange for them doing their own repairs and improvements.
And anything that is moveable can be excluded, such as kitchens as they do in germany. Same goes with garden interiors. You can have councils rent out essentially housing shells, which people can do pretty much whatever they want with, all structural improvements being part of the fixed rent. Any damage to structral improvements or removal of unwanted non-structural improvements being covered by a deposit.
Yes Mark, it can all be fixed if it were done differently. At the same time we could could completely reinvent the nonsense idea of the city and the residential suburb so that housing and jobs were closer and thus we could remove much travelling! We might even agree on many features.
But my point is that it isn't done differently now. Neither will it be done differently in the lifetime of people starting families now.
So you are takling about a situation that doesn't exist, I am talking about people having to make decisions in the here and now and do what they must.
W42, thanks, agreed.
"I am talking about people having to make decisions in the here and now and do what they must"
Yes, so am I, and the answer is, between them, the borrower and the lender have entered into a contract. If the government thinks it is unfair to make unemployed people pay mortgage interest, then they can just pass a law saying it is illegal for banks to make unemployed people pay mortgage interest or even mortgage instalments, end of discussion.
For sure, that is interference in private contracts, but why drag the taxpayer into this? If there's an extra 1p on my income tax to pay for SMI, then that is interfering in the private contract between my employer and me (or your employer and you) and we have, frankly, f- all do with mortgage borrowers losing their jobs.
Kj, for example and exactly, good suggestion, it's three-quarters of the way to LVT.
"If the government thinks it is unfair to make unemployed people pay mortgage interest, then they can just pass a law saying it is illegal for banks to make unemployed people pay mortgage interest or even mortgage instalments, end of discussion."
But they quite patently don't. This is just Politically Acceptable Way No 253 of giving taxpayers' money straight to the banks.
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