Boris Johnson has unveiled plans that would allow for benefits to be put towards mortgages in England in what he has coined the ‘benefits-to-bricks’ pledge.
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What Is The ‘Benefits-To-Bricks’ Scheme?
Boris Johnson made this ‘benefits-to-bricks’ pledge in his first big speech since surviving the vote of no confidence on Monday. Speaking in Blackpool, he also promised to extend a scheme that allows for social tenants to buy their homes.
The pledge is reminiscent of Margaret Thatcher’s ‘Right To Buy’ scheme in the 1980s, which saw 2 million council houses purchased by tenants. However, out of those 2 million houses, less than 5% were ever replaced, leading to a huge housing availability crisis.
Critics of the pledge say that the proposals are unworkable and would only make the housing crisis worse. Boris Johnson has said that he wants to extend the scheme “within existing spending plans” and ensure a “one-for-one replacement” of every home sold.
What Does It Mean?
We spoke to Jonathon Christie from The Property Buying Company about the Prime Minister’s Plans. He told us “Boris Johnson’s speech on a new housing policy package is certainly an attempt to try and raise his popularity in the polls by targeting people on benefits who traditionally have voted against the conservative party. Whether a return to policies such as Right To Buy which helped Margaret Thatcher’s popularity rise in the 1980’s and early 1990’s remain in power will be as accessible to as many people are unknown but the biggest deterrent to people trying to get on the ladder or access these schemes, including the 95% deposit, will be the ability to raise a deposit”.
He went on to say that “With the cost-of-living crisis in full effect, with surging inflation and untenable energy prices, will people who are already suffering the most and struggling to feed and clothe their families now be able to put away and save for a house deposit also? I fear not.”
The Prime Minister has also said that Universal Credit recipients would have the choice between spending their benefits on rent or putting it towards a mortgage. The government will also explore discounting the Lifetime ISA and Help To Buy ISA savings from Universal Credit eligibility rules.
At the moment, claimants are only eligible for Universal Credit if they have savings below £16,000 and Lifetime ISAs are included in this limit. By changing these policies, Mr Johnson said it would “help millions realise the dream of home ownership”.
Housing benefits cost the government around £30 billion a year, much of which goes to landlords. If a person has a mortgage, they will not usually qualify for the payments.
What Are Critics Saying?
Critics of the scheme have pointed out that it is not entirely clear how the government’s Right-To-Buy policy will work. There is already a housing availability crisis without selling properties. Around 1.1 million people are on waiting lists for housing. They have also not revealed who exactly will be able to take advantage of the scheme, how much it will cost, and whether it will be capped.
Whilst the government has promised to replace each home that is sold with funding for housing associations, previous schemes have had problems with replacing homes once others had been bought. Furthermore, the scheme depends upon the negotiations with housing associations, who may not all want to take part.
If the revival of the ‘Right To Buy’ scheme goes ahead as planned, it could spell good news not only for potential new homeowners but also for the Conservative party themselves. A large demographic of the Conservative party is homeowning adults, and by helping ‘generation rent’ onto the property ladder, it could be a great way to win back trust in the Prime Minister after the vote of no confidence was held against him on Monday.
However, the knock-on effect this could have on the affordable house market is sizeable and if measures aren’t taken to avoid the mistakes of the past, there could once again be a lack of availability for council housing.
This sums up everything you need to know about the ‘benefits-to-bricks’ pledge, if you have any questions, queries, or any insight into the ‘Right To Buy’ revival, please don’t hesitate to get in touch!