Frankie W

"Even a stopped clock is right twice a day"

This week's big question got me reflecting on housing policy in general.

I'm no fan of our former Prime Minister Boris Johnson but he once had a remarkably good policy idea...perhaps typically it never got delivered. The idea was that Universal Claimants should be supported into home ownership and to do this government would instigate two specific but groundbreaking reforms.

First, savings in a Lifetime ISA (the government's preferred savings vehicle for a house deposit) would not count towards savings restrictions for Universal Credit purposes allowing UC claimants to not only save up if they can but to benefit from the government's 25% top-up. Secondly, that the housing element of UC could be used to fund mortgage repayments not just rent.

Dealing with the first point, it may well seem counterintuitive to be talking about UC claimants (most of us scraping by wondering if we can cover the bills each month) being able to put money aside for a house deposit but there are specific cases where this policy would be useful. For those who have recently separated and perhaps have a cash windfall from a house sale or even had significant savings built up but now find themselves on a solo (low) income with kids to house and feed the system says: spend your savings and then you can claim. Wouldn't it be more sensible if the system said: set that money aside for a house deposit, we'll let you claim until you can get into home ownership.

There is a benefit to government of UC claimants becoming home owners, which brings me to the bigger and more important second part of the policy. If UC could be used towards mortgage payments not just mortgage interest costs (as is the case now and even then it's not easy to claim) then eventually these housing element costs will fall and fall until they are non-existent as the UC claimant pays off the mortgage - surely its better for government to help people pay their mortgage and then save on housing element in the long term than ensure a generation of UC claimants are still claiming housing element into retirement? Not only this but allowing housing element to go towards mortgage repayments would open up home ownership to a wider group of people as mortgage lenders would now consider your total income (UC included) in mortgage applications (housing element is discounted by lenders because they know this part of your award will be ineligible once you move from rent to home ownership) and for those lucky enough to own their own home but unfortunately fall on hard times it would mean UC could prevent defaults and repossessions.

Combined with an expansion of shared ownership homes available and even expansion of the existing but small scale 'right to part buy' scheme, this could be a truly radical policy that would give hope to millions.