Autumn statement: Hunt announces 7% cap on social rent and mortgage help for benefit claimants

As part of Chancellor Jeremy Hunt’s autumn statement, the government has announced a 7 per cent ceiling on social housing rents for next year, as well as a reduction in the time universal credit applicants have to wait to get a loan to cover mortgage interest payments. cover.

According to existing rules, the government regulates how much the rents of social housing may increase annually.

Prior to the announcement, rents would have increased by the consumer price index (CPI) plus 1 percent, meaning potential increases next year would have been 11 percent.

In October, CPI inflation rose to a 41-year high of 11.1 percent, compared to 10.1 percent the month before.

But after the announcement, rents for social housing will only be able to increase by a maximum of 7 percent in 2023-2024.

This will save the average social housing tenant £200 next year and, according to calculations in the statement, will generate total government savings of around £630 million over 5 years.

According to the Regulator of Social Housing, approximately 3.5 million households live in social housing, accounting for about 84 percent of all affordable rental and low-cost owner-occupied housing.

Social housing providers are under fire after a two-year-old boy died of a respiratory illness caused by long-term exposure to mold in his family flat that he received through social housing. The flat was in a block owned by the Rochdale Boroughwide Housing (RBH) flat.

The devastating case has sparked outrage and drawn attention to the conditions social housing tenants sometimes endure.

Commenting on the government’s announcement, National Housing Federation CEO Kate Henderson said:

‘Housing corporations are well aware of the financial pressure their residents face.

‘The sector has made a commitment that no tenant will be evicted from the house due to financial problems where he works with his housing association. Each housing association also has tailored support for residents struggling with the cost of living.

“We are also delighted that the government has announced a rent ceiling exemption for assisted living providers, ensuring the future viability of care and support for some of the most vulnerable people in the country.

‘The vast majority of tenants who use these specialized services receive their rent increase fully reimbursed through rent allowance or universal credit.’

In addition, housing associations have promised to limit the rent increase for share owners to 7 percent, equal to the social rent ceiling.

More help for mortgage holders with universal credit

In addition, given the sharp rise in interest rates, the government has announced support for mortgage holders receiving universal credit.

Starting next spring, people with universal credit will be able to apply for a mortgage interest support loan to help with interest payments after three months of application instead of nine.

The government will also abolish the zero pay rule so that claimants can continue to receive aid while they are at work and have universal credit.

How Mortgage Interest Support works

SMI used to be a non-repayable benefit, but is now a loan that must be repaid.

The payment you receive only covers the mortgage interest, not the loan amount or any arrears.

You can usually get help paying interest on up to £200,000 of your loan or mortgage, and the the interest rate used to calculate the amount of help you get is currently 2.09 percent.

Borrowers must repay interest when they sell or transfer their home, although the loan can be moved to another home.

The government cannot force you to sell your home to repay the loan.

The interest you pay can go up or down, but the rate does not change more than twice a year. The current rate is 1.4 percent.

You pay back the SMI loan from what’s left over after you’ve paid off your mortgage and any loans secured against your home.

If you don’t have enough left over to pay off the SMI loan in full, the remainder of the loan will be written off.

What will happen to the mortgage interest?

Mortgage rates have risen sharply since the mini-budget in September. Although they are starting to fall, the flat rates are still significantly higher than in the summer.

Before the mini-Budget on Friday, Sept. 23, the average two-year fixed rate across all loan-to-value brackets was 4.74 percent and the five-year fixed rate was 4.75 percent, according to Moneyfacts.

Rates now stand at 6.22 percent and 6.03 percent, respectively, both down since the announcement of the base rate on Nov. 3.

The impact is great. According to new research from Citizens Advice, more than a quarter of mortgage holders would not be able to pay their monthly repayments if they increased by £100 a month.

Nearly half (45 per cent) would not be able to make their payments if they increased by £250 a month, the organization said.

In September, 49 per cent of mortgage holders who advised Citizens Advice about debt indicated that each month more money was coming out of their finances than was going in.