A Liberal Democrat MP has called for the Government to delay or scrap a mortgage benefit cut that could leave up to 100,000 homeowners in arrears.
Stephen Lloyd, MP for Eastborne and the Lib Dem work and pensions spokesman, says consumers’ lack of readiness for this rule change – which comes into effect on April 6 – is a “horror”.
Around 124,000 homeowners are set to lose this Support for Mortgage Interest benefit. But to date only 10,000 have registered for the loans that will replace this help, despite Government trying to contact all SMI claimants.
Lloyd says that as a result around 100,000 vulnerable people could be left without their mortgage payments being made.
Mortgage lenders have confirmed that they are currently contacting affected customers. UK Finance says lenders will work with customers to resolve financial difficulties that arise as a result of these changes.
This rule change was announced last summer by the Department of Work and Pensions. Until now SMI has been a benefit paid to the unemployed or disabled to help with mortgage costs. It will be replaced with a system of loans on which interest will be charged.
In addition he pointed the waiting time for SMI payments has been expended to 23 weeks. Lloyd says this is on top of the original 16-week wait.
Lloyd described these changes as “mean-spiriting and unintelligent.”
He says: “This mortgage interest benefit change will force some homeowners into even more debt and will force others to sell their homes, putting themselves at the mercy and cost of their local council’s housing department.”
He adds that this will end up costing the taxpayer more, as the cost of providing housing benefit for rented accommodation is significantly higher than the cost of providing support with mortgage interest payments to keep people in their own homes.
Lloyd says: “These changes must be delayed until more people are, at least, acknowledged by the DWP to have taken the necessary steps to adjust their mortgage repayments. Otherwise we are heading for another policy car-crash.”