Thousands could be hit by mortgage benefit cuts, claim major charities

By  Steven Bell,  Will Unwin, Ryan Gallagher, & Deborah Trickett

The elderly and unemployed across Greater Manchester could lose their homes if proposals to cut mortgage benefits go ahead.

Two charities, the newly-formed Age UK and homeless campaigners Shelter, have expressed concern about the coalition government’s plan to cut the Support for Mortgage Interest (SMI) allowance in next week’s Comprehensive Spending Review.

The mortgage benefit, used by around 117,000 pensioners and 110,000 jobseekers nationally, is set to be slashed, with some people losing as much as 40% of their income.

Age UK Director, Michelle Mitchell, said: “The cut to the mortgage interest element of pension credit is very concerning and we have already received a number of calls from worried older people facing a shortfall in their mortgage repayments due to this cut.

“Changing mortgage providers is much more difficult when you are in later life so the options for reducing the shortfall are extremely limited leaving many people with the huge worry of how they will find the extra money to avoid going into arrears.”

Shelter Chief Executive, Campbell Robb, said the charity has seen a rush of enquiries from people who have learned that their payments will be cut.

“These people are already financially stretched, and will now face a real struggle to make ends meet,” said Mr Robb. “We are concerned they will end up falling into a spiral of debt and, ultimately, repossession. The Government must wake up and realise just how important this scheme is by making no more cuts in the upcoming comprehensive spending review.”

The complexity of SMI means that the various councils across Greater Manchester will have a different reaction to the cuts, as it will be up to them to decide how much they are willing to offer benefit claimants.

Manchester City Councillor, Hugh Barrett, claimed the first year of owning a house is the worst for any couple, as they have a lot of first time costs and will focus on making sure they have electricity and heat, and therefore have little left over for mortgage payments. 

The Labour councillor added: “I have a constituent, who is a teacher on £23,000 a year, with two children and she can’t afford the deposit on a house, and the proposed cuts will affect people like her.

“Our system is barmy. Everyone wants to buy a house, and no one wants to rent due to the stigma attached to it. In Europe they mock us for our desire to buy houses, until we take note of their system we aren’t going to get far.”

The government will set out the findings of its Comprehensive Spending Review next Wednesday, 20 October. 

Anyone worried about their housing situation can call Shelter’s free helpline on 0808 800 4444 or visit for independent advice.

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