Plans to turn ‘benefits into bricks’ need careful consideration, say experts

Plans for a home buying shake-up will need careful consideration and serious investment, according to commentators.

Prime Minister Boris Johnson has pledged to turn “benefits to bricks” – changing welfare rules so that the 1.5 million people who are in work but also on housing benefit will have the choice to use their benefit towards a mortgage, rather than automatically going directly to private landlords and housing associations.

The UK Government will launch a review of access to mortgage finance for first-time buyers, with the aim of making it easier to widen access to low-cost, low-deposit finance such as 5%-deposit mortgages. It will report back in the autumn.

Two-and-a-half million tenants renting their homes from housing associations will also be given the right to buy them outright.

Mr Johnson said: “We will continue to insist… that there’s a one-to-one replacement so that when the sales are made that you use the receipts to build more… We want to see at least a replacement.”

Charles Roe, director of mortgages at trade association UK Finance, said: “The mortgage industry recognises the importance of homeownership and today’s announcements by the Prime Minister could help more people realise their dream of owning their own home.

“Firms are committed to lending responsibly, with regulatory rules in place to ensure that mortgages are affordable – it will be important to carefully consider any changes to ensure they deliver good outcomes for customers throughout the life of the mortgage.

“We look forward to discussing the proposals and will continue working closely with the Government to help more people get on to the housing ladder.”

Tim Bannister, Rightmove’s director of property science, said: “If a review of the mortgage market could help with the challenge of needing such a big deposit then it would be greatly welcomed by those who are able to demonstrate that they can afford monthly payments, but who are currently locked out of homeownership.

“It’s clear to see why there are many renters keen to get on the ladder, as they’re forking out 40% more each month than 10 years ago, while low interest rates means average mortgage payments have only increased by 11% over that same time.”

Alicia Walker, head of policy, research and campaigns at Centrepoint, said: “If the Government is truly serious about turning ‘benefits into bricks’ then we need to see a serious level of investment into genuinely affordable social-rented housing.

“We support measures to improve homeownership, particularly for young people as rates have declined drastically over the last three decades. However it’s not clear how much this will really support people in housing need.

“As well as this, extending the Right to Buy to housing associations risks further eroding the stock of social housing, which many young people desperately need. Promises of like-for-like replacements have been made before but not been followed through.”

Kiran Ramchandani, director of policy and external affairs at Crisis, said: “This ill-conceived announcement is the exact opposite of what we need to tackle the mounting housing crisis.

“For decades our social housing stock has been stripped bare… to suggest this money can be used to secure mortgages without a costly investment to the benefits system is a fallacy.

“The only way to fix our broken housing system is to build more homes which people can afford – we urge the Government to get on with doing this if we’re ever going to end homelessness for good.”

Dan Wilson Craw, deputy director of Generation Rent, said: “Neither the review of low-deposit mortgages, nor extending Right to Buy to housing associations will address the shortage of homes we need in places people most want to live.

“For that we need a programme of social house building beyond the one-to-one replacement of homes bought under Right to Buy.”

Polly Neate, chief executive of Shelter, said: “The Prime Minister’s housing plans are baffling, unworkable, and a dangerous gimmick.

“Hatching reckless plans to extend Right to Buy will put our rapidly shrinking supply of social homes at even greater risk.

“The maths doesn’t add up: why try to sell off what little truly affordable housing is left – at great expense – when homelessness is rising and over a million households are stuck on the waiting list?

“The Government needs to stop wasting time on the failed policies of the past and start building more of the secure social homes this country actually needs.”

James Andrews, a personal finance expert at Money.co.uk, said: “Boris Johnson is unashamedly dipping into Margaret Thatcher’s ‘greatest hits’ catalogue to shore up backbench support following this week’s damaging no-confidence vote.”