Boris Johnson’s benefits for mortgages plan ‘totally detached from reality’

‘We’re left scratching our heads thinking how on earth can this work in practice’

(PA)

Boris Johnson’s plan to allow low-paid workers to use housing benefits to pay for mortgages is unworkable and “totally detached from reality”, experts have claimed.

The scathing assessment came as the prime minister attempted to refocus MPs’ attention on domestic issues after narrowly surviving a no confidence vote with his political authority severely weakened.

In a speech on Thursday, Mr Johnson also announced an extension of Margaret Thatcher’s flagship Right to Buy policy for housing association tenants — but the plan was immediately derided as “baffling”.

Attempting to enable more people to “get on the property ladder”, Michael Gove, the Levelling Up secretary, confirmed that people in receipt of housing benefits will be able use payments to securing mortgages.

The prime minister later told an audience in Blackpool the money would be better spent helping people buy their own home than on paying their rent – in a policy he described as “benefits to bricks”.

He said: “It’s neither right nor fair to put ever vaster sums of taxpayers’ money straight into the pocket of landlords.”

“We are going to look to change the rules on welfare so that the 1.5 million working people who are in receipt of housing benefits - I stress working people - and who want to buy their first home will be given a new choice: to spend their benefit on rent, as now, or put it towards a first-ever mortgage.”

But Miatta Fahnbulleh, the CEO of the New Economics Foundation think-tank, said the policy was “totally detached from reality”, warning those on benefits were already struggling in the midst of a cost-of-living crisis.

“Social security has been cut so much that those receiving benefits can barely feed their kids, let alone save for a deposit or afford a mortgage when house prices are sky high,” she said.

Ms Fahnbulleh added that Right to Buy is a “relic of a policy has fuelled our housing crisis for decades”, warning an extension would be “completely nonsensical”.

Polly Neate, the chief executive of homelessness charity Shelter, said the government had failed to release “any clear proposals on how people receiving housing benefit will be able to take out a mortgage”.

“Instead we’re left scratching our heads thinking how on earth can this work in practice.”

She added: “Under the current system to qualify for universal credit you cannot have more than £16,000 in savings, so how are people meant to afford a deposit – it’s a classic Catch-22.

“And even if someone managed to by-pass the savings issue, these plans essentially encourage people who are already struggling to make ends meet to take on large amounts of debt.

“Much like the rest of the prime minister’s latest housing plans this is unworkable as it stands. Rather than far-fetched and fanciful schemes the government just needs to build more secure social homes with fair rents tied to low incomes. These are the type of homes people need.”

Another campaign group, Crisis, also described the Right to Buy extension as “ill-concieved”, warning that for decades social hoising stock has been “stripped bare”.

Director of policy and external affairs Kiran Ramchandani added: “The reality is that with housing benefit currently frozen, it’s barely enabling anyone to rent as it is.

“To suggest this money can now be used to secure mortgages without a costly investment to the benefits system is an utter fallacy.

Boris Johnson’s official spokesman earlier admitted that anyone seeking to buy a home in this way would still have to find a way to pay their rent.

He said: “Yes,” adding: “If they were able to save money per month, over a number of years, they would then be able to save money towards a deposit.

“And then they would have a monthly mortgage payment, a proportion of which would be provided through housing support.”

The spokesperson said the change would allow somebody receiving universal credit to put money into an ISA – so they would not be hit by the current £16,000 cap of savings, above which they cannot claim UC.

But he admitted sky-high property prices in places such as London might mean a house purchase would still be unaffordable, saying: “I think it will vary per area.”