Right-to-buy revolution but Gove can't say how people on benefits can afford a house

9 June 2022, 08:42 | Updated: 9 June 2022, 09:14

By Will Taylor

Housing association residents on benefits will be helped to buy their home in a right-to-buy shake up.

New plans will allow tenants in housing associations to buy their own homes while on welfare, Michael Gove said.

But he admitted homeownership for people without money to maintain their new houses would constitute added "responsibility" and denied reports that a maximum discount on the price of purchasing housing association homes could reach 70%.

The levelling up secretary told LBC he wanted to see people put their money into paying off their own mortgage, instead of lining the pockets of landlords.

He told LBC's Nick Ferrari at Breakfast: "It's already the case there are people on in-work benefits who are paying significant sums in rent and the amount they are paying in rent, if they converted that into mortgage repayments they would be able to handsomely meet their mortgage repayments from their overall income.

"One of the things I want to do is extend home ownership across the country, and there’ll be many people in the North, the Midlands and the South West who will be well able to get on the property ladder using the amount they currently earn and receive in Universal Credit."

Read more: It'll be 'challenging' to sustain lower taxes, says former Bank of England deputy governor

Asked how someone on welfare would afford fixing and maintaining their properties without a landlord to handle repairs, the levelling up secretary said: "All of us recognise once you are on the path to home ownership that you are taking on an additional level of responsibility.

"But I trust people to make their own decisions about budgeting at the moment rather that seeing that money, in effect, disappear from their budgets and go into the hands of landlords, I'd like to see them building up a stock of capital over time."

And he denied a report in The Times that a maximum discount of 70% on the price of the property would be offered.

"I don't think we'll be offering 70% discounts for our housing association right to buys… I'd have to check that out, we're not proposing to offer discounts of that scale for housing association properties."

His comments come ahead of Boris Johnson's speech on Thursday, telling the public he is firmly on their side as he "reaffirms his commitment to supporting them throughout this challenging period".

An announcement on further reforms is expected in the coming weeks about Government plans to "make people’s lives easier, boost UK productivity and increase growth".

Mr Johnson's speech in Lancashire comes after the Organisation for Economic Co-operation and Development predicted on Wednesday that economic growth in the UK will grind to a halt in 2023.

Shadow levelling up secretary Lisa Nandy attacked the plans said: "Are lenders on board? Because if they aren't, it's completely unworkable.

"There are measures the Govt could take to help families and crack down on landlords pushing up prices. Today we’re announcing plans to protect leaseholders from higher costs.

"But in the end we need a serious, workable plan to increase the supply of affordable housing."

Jess Phillips posted online: "If you have more than 16k in savings you don't qualify for universal credit. Just fyi. Just a small detail.

"How can you save for a house deposit to buy a house using your benefits if the more you save (over 6k) the less benefits you have. Just a comment on the new policy announcement."

Mr Gove also insisted Rishi Sunak is "laser focused" on cutting tax despite a hike in National Insurance this year.

It follows calls for Boris Johnson to reset his leadership by implementing a reduction in the tax burden that would help Brits with the cost of living crisis.

The problem was clear on Tuesday when petrol prices jumped by 2p a litre, the biggest hike in 17 years, with the RAC saying the average cost of filling up a typical family car with petrol could go over £100 on Thursday.

Read more: Boris hints at tax cuts to woo Tory rebels and pleads move on from confidence vote

Nick said one tax cut, a 5p reduction in fuel duty, had already been "wiped out" by the soaring prices when speaking to Mr Gove, the levelling up secretary, on Thursday.

He told LBC’s Nick Ferrari at Breakfast: "Completely, I'm not for a moment denying the pressures that households are facing, they're very real, and Government can help, but when we're facing the sort of problems that we have in the energy market as a result of the war in Ukraine, then it is very difficult for everyone."

But he insisted Boris Johnson and the Chancellor wants to shred the burden on Brits as they face soaring prices and bills in the cost of living crisis.

Pushed by Nick on whether tax cuts were on the horizon, Mr Gove said: "The Chancellor and the PM want to and will introduce tax cuts, but the Chancellor would kill me if I announced anything before he did."

Petrol prices are soaring
Petrol prices are soaring. Picture: Alamy

He added: “I respect Rishi too much to say more at this stage, other than, as he outlined in a speech earlier this week, he is laser focused on reducing the cost of government and reducing tax in due course.”

Tax cuts are seen as one way Boris Johnson could get his career as Prime Minister back on track, offering a way for Brits to keep more of their money while inflation strikes supermarket shelves and petrol stations.

The Government has taken steps to reduce the cost of living crisis’s impact, providing a £400 discount on energy bills from October, while eight million of the most vulnerable households are in line for a one-off grant of £650.

Pensioners will get a one time £300 payment and disabled people will get £150.

A council tax rebate of £150 is also available.

But critics have dismissed notions that the Government can be considered a tax cutting administration, given that Mr Sunak has imposed a windfall tax on energy firms and raised National Insurance contributions by 1.25 percentage points.

He was also ridiculed for announcing an income tax cut from 2024.

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