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

The Government has announced a 7 per cent cap on social housing rents next year as part of Chancellor Jeremy Hunt’s Autumn Statement, as well as reducing the time universal credit claimants must wait to get a loan to help cover mortgage interest payments.

Under existing rules the Government regulates how much social housing rents can increase each year.

Prior to the announcement, rents were slated to increase by the consumer price index (CPI) rate plus 1 per cent – meaning potential increases next year would have been 11 per cent.

The Government has introduced additional support to help households struggling with increased rent and mortgage payments

In October CPI inflation jumped to a 41-year high of 11.1 per cent, up from 10.1 per cent the month before.

But following the announcement social housing rents will only be able to rise by a maximum of 7 per cent in 2023-24.

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

Around 3.5 million households are in social housing, accounting for around 84 per cent of all affordable rent and low-cost home ownership homes, according to the Regulator of Social Housing.

Social housing providers are under fire after a two-year old boy died from a respiratory condition caused by prolonged exposure to mould in his family flat provided through social housing. The flat was one in a block owned by Rochdale Boroughwide Housing (RBH) flat.

The devastating case has caused outrage and shone a spotlight on the conditions social housing tenants sometimes have to endure.

Responding to the Government’s announcement, Kate Henderson, chief executive of the National Housing Federation, said:

cost of living

‘Housing associations are deeply aware of the financial pressures facing their residents.

‘The sector has made a commitment that no tenant will be evicted because of financial hardship where they are engaging with their housing association. Each housing association also has tailored support in place to help residents who are struggling with the cost of living.

‘We are also very pleased that the Government has announced an exemption from the rent cap for supported housing providers, which will ensure the future viability of care and support for some of the most vulnerable people in the country.

‘The overwhelming majority of tenants who use these specialist services will have their rent increase met in full by housing benefits or universal credit.’

In addition housing associations have also committed to capping the rent increase for those using the shared ownership scheme at 7 per cent, to match the social rent cap.

More help for mortgage holders on universal credit 

In addition, in the face of sharply increased interest rates the Government has announced support for mortgage holders receiving universal credit.

From spring next year those on universal credit will be able to apply for a Support for Mortgage Interest loan to help with interest repayments after three months of claiming, instead of nine.

The Government will also abolish the zero earnings rule to allow claimants to continue receiving support while in work and on Universal Credit.

Support for Mortgage Interest: Who qualifies?

Support for Mortgage Interest is a Government loan available to people who receive:   

  • Universal Credit
  • Income Support
  • Income-based Jobseeker’s Allowance 
  • Income-related Employment and Support Allowance 
  • Pension Credit

Those receiving Income Support, income-based JSA or income-based ESA can’t get an SMI loan until they have been claiming it for 39 weeks in a row. 

From spring 2023, those receiving Universal Credit will need to have claimed it for 3 months in a row to be eligible, rather than 9. 

Receiving a tax refund, or statutory sick pay, maternity pay, paternity pay, adoption pay or shared parental pay may disqualify you. 

The Government says you might still be able to get a n SMI loan if you apply for one of the qualifying benefits, but cannot get it because your income is too high.  

How Support for Mortgage Interest works 

SMI used to be a non-repayable benefit, but it is now a loan which must be paid back. 

The payment you receive will only cover the mortgage interest, not the amount you borrowed or any arrears.   

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

Borrowers need to repay with interest when they sell or transfer ownership of their home, although the loan can be moved to another property. 

The Government cannot force you to sell your home in order to repay the loan.  

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

You will repay the SMI loan from what’s left after you pay off your mortgage and any loans secured against your home. 

If you do not have enough left to pay off all of the SMI loan, the rest of the loan will be written off.

What is happening to mortgage rates? 

Fixed rate mortgages have started falling since last month after rising sharply

Fixed rate mortgages have started falling since last month after rising sharply

Mortgage rates have risen dramatically since the mini-Budget in September. Even though they have begun to fall, fixed rates are still significantly higher than they were in the summer.

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

The rates now stand at 6.22 per cent and 6.03 per cent respectively, having both fallen since the base rate announcement on 3 November.

The impact is stark. More than a quarter of mortgage holders wouldn’t be able to afford their monthly repayments if they increased by £100 a month, according to new research from Citizens Advice.

Nearly half (45 per cent) would be unable to make their payments if they rose by £250 a month, the organisation said.

In September, 49 per cent of mortgage holders Citizens Advice gave debt advice to said they had more money coming out of their finances every month than going in.

Are you elderly and anxious about bills? 

Age UK is urging older people to call its free national advice line on 0800 169 65 65.

Its staff will check you are receiving everything you are entitled to, including pension credit and attendance allowance.

Find out more here about pension credit, or call Age UK which will help you apply.

Age UK adds that energy providers have a duty to offer support if people are struggling with bills or debt, and you can ask about an affordable repayment plan.   

Read more here about dealing with soaring energy bills and here for energy saving tips.

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