Boris Johnson is revealing plans that could allow him to use his benefits to help people get mortgages.
Following the Tory confidence votes meltdown, PM makes a huge speech in Lancashire pledging to revive Margaret Thatcher’s housing revolution.
He will announce that he is extending the ‘Right to Buy,’ which was used to help millions of people buy their properties from councils at enormous discounts during the 1980s and 90s, to housing association tenants.
His proposals include helping families who are on Universal Credit to get onto the property ladder. One idea is to allow benefits to be counted as income when applying for a mortgage – which could open up the dream of home ownership to millions more.
Mr Johnson is set to argue that £30billion in housing benefit that currently goes towards rent could help people secure and pay for mortgages.
Expect the PM to also talk about how a new generation pre-fab home could help accelerate housebuilding.
However, critics have pointed out that UC is only available to families with less than £16,000 in investments and savings, meaning they would have very limited access to mortgages.
A minimum deposit of 10% is required by most lenders. Michael Gove, Levelling Up Secretary, indicated that the government is looking into creating a savings account that does not count towards the benefits limit. However it remains unclear how this would work and how banks will be able to take the handouts into their calculations.
He said that Right-to-Buy Extension does not have any new funding. Pilot projects are currently being considered. The schemes offer discounts up to 70% depending on how long the property has been owned. He did not say how many would be eligible.
Boris Johnson, in a speech that will be heard across Lancashire, will present new ideas to increase home ownership.
Today, Margaret Thatcher’s housing revolution will be revived by the PM (right). He has a new package for low-income families to buy homes. Michael Gove (left), however, admitted that no funding is available and did not say how many individuals would be eligible to apply for the scheme.
Right to Buy was one of Margaret Thatcher’s policies. The statue of Margaret Thatcher is located in Grantham. Around two million people were given the opportunity to purchase their homes at discounts up to 70%
Whitehall sources refused to discuss details, but they confirmed that there would be “something for hard-working workers on benefits”.
According to another source, people will be encouraged to save money for deposits regardless of their financial status.
According to the source, “currently too many people are investing huge sums in the private rent market when it could be more wise to invest in their future with mortgage payments on their homes.”
But plans to open up Right to Buy to all 2.5million housing association tenants appear to have been scaled back due to the cost, which one source warned could reach £3billion a year.
No additional funds have been provided for the new scheme. Instead, Gove was asked to make use of existing Housing Department funds.
A round of interviews revealed that Gove would confirm there will be a cap on how many people can benefit from the government’s new housing programme.
He suggested that it should be higher than 1,000 but then said, “That’s something I’ll be talking to housing associations.”
Sky News interviewed him and he said: “We’re specifically looking into a savings vehicle people can use in order save for that Deposit.
“Homeownership isn’t just beneficial for individual homeowners, it is also good for society as a whole.
“We want everyone to own a piece of the future. We want them to have an opportunity to make investments in their homes. We want families to have safe, secure, decent and warm places in which to raise our children.
He said, when asked about where the funds for the scheme would come, that it would be the total parcel and the entire envelope of government spending.
Mr Gove said the Government will make sure there are new houses to replace those bought by lower-paid workers under new plans where they can use housing benefits to buy their homes and an extension of the right to buy for housing association tenants.
He told Sky News: ‘One of the things that we will be doing is making sure that there is a replacement – a like-for-like, one-for-one replacement.
“Yesterday I introduced legislation in the House of Commons, which means that developers will have to pay a new tax.
“That basically means that, whenever new developments are made, the large housing corporations will make some money and some will set aside money to help ensure there’s more affordable housing, or council housing, for the people who really need it.
Gove stated that the Levy’s structure means that new developments will have money when they are approved.
Councils are allowed to borrow against this in order for them to invest.
Lisa Nandy, shadow levelling-up secretary, said that the ideas had’real pragmatic problems.
She stated that ‘In principle it’s great to work to increase the security of your own home for people who are in the benefit system’.
“The problem is that the Government, like always, hasn’t thought about the details.
“There is no indication that lenders have joined this effort.”
“The government can declare that they want to make mortgages available to housing benefit recipients, but it is not possible unless lenders are willing to allow it.
There are other real problems. To qualify for Universal Credit, you’ve got to have savings of less than £16,000, which means that most people who the Government are trying to reach with this announcement are not going to have anything near the amount that they need for a deposit on a home in order to qualify for that mortgage.’
The speech today is being billed as the initial step towards a relaunch following Monday’sbruising confidence vote which was won by the Prime Minister with a margin of 219 to 148.
Yesterday, he insisted that “nothing” and “no-one” will stand in his way while attempting to focus the Government’s efforts upon public priorities following months of political infighting.
The PM will make a speech warning that there are’strong global headwinds to the economy’. However, he insists that the Government is equipped with the tools necessary to keep rising prices under control. He said: “While this is not an easy task, we can still be certain that it will be done quickly and will result in a stronger economy.”
To ‘help people lower their costs in every sector’, the PM has promised to continue reforms.
He said, “We will use these moments to accelerate reforming missions of the Government and reduce costs that Government imposes upon businesses and individuals.”
“With affordable energy, more childcare, transportation, housing, and transport, we can protect families, increase productivity, and most importantly, grow the UK’s economy.
Right to Buy, which was one of Mrs Thatchers totemic programs, gave two million families the opportunity to purchase their house at as low as 70%.
One pilot scheme in the Midlands found it cost the taxpayer £65,390 per home sold
David Cameron’s 2015 manifesto included proposals for tenants to purchase discounted homes from housing associations.
Johnson promised to consider new pilots to the scheme before the 2019 general elections, even though that didn’t happen. However, industry experts warned that the process of granting tenants the right and obligation to buy property is much more difficult than selling council properties in the 1980s.
Housing association properties can be financed with private sector debt. This is different from council homes. One pilot scheme in the Midlands found it cost the taxpayer £65,390 per home sold.
The principle that one property per sale would result in a new building was also used by pilot programs. Although the plan may be criticized for not being as effective, it adds complexity and cost.